Zimmer agrees to buy Paragon 28 for $1.1B
A merger between two major medical device manufacturers in orthopedics has been agreed to for $1.1 billion.
Zimmer Biomet is set to acquire Paragon 28, a company that designs and produces food and ankle implants and supports, for $13 a share, totaling roughly $1.1 billion. That price tag is only a slight premium, as Paragon stock sat at around $12 before the deal was announced Tuesday.
With the buyout, Zimmer will add Paragon’s portfolio of surgical devices and mechanical ankle parts to its own, expanding the company’s foothold in the orthopedic supplier market.
"This proposed transaction further diversifies Zimmer Biomet's portfolio outside of core orthopedics and positions us well in one of the highest growth specialized segments in musculoskeletal care, while creating cross-selling opportunities in the rapidly growing ambulatory surgery center (ASC) space," Ivan Tornos, president and CEO of Zimmer Biomet, said in a statement.
"Paragon 28's broad and innovative foot and ankle portfolio, robust product pipeline and dedicated and highly trained sales force, combined with Zimmer Biomet's global reach and capabilities, will uniquely position us to address the unmet patient needs of this highly complex anatomy,” Tornos added.
Zimmer said the ASC market for foot and ankles alone is around $5 billion and growing. The company added that the acquisition will be paid for in cash and by diluting its stock over the next 24 months. More details are said to be available during Zimmer’s next earnings call with investors, scheduled for Feb. 6.
As part of the transaction, non-tradable contingent value rights will be extended to holders of Paragon's stock, allowing those individuals and groups to receive up to o $1 per share in cash. The payout is contingent on Zimmer’s revenue hiting within a range of $346 million and $361 million in fiscal year 2026 once the deal is finalized and approved by regulators.
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