Warsaw, Indiana-based Zimmer Biomet Holdings, Inc. has announced its acquisition of Farmingdale, New Jersey-based A&E Medical Corporation for $250 million.
The purchase price included $150 million in cash at closing and the remaining $100 million in cash due in 2021. A&E Medical was a Vance Street Capital portfolio company, initially purchased by the middle-market private equity firm in 2016.
Founded over 50 years ago, A&E Medical creates and manufactures sternal closure devices. Its product portfolio includes A&E DoubleWire™, the A&E Medical® Sternal Cable System, and the Thorecon® and Tritium® rigid fixation systems. Its portfolio also includes pacing wire and surgical punch products.
According to Zimmer, the global sternal closure business is growing “at a high single digit percentage rate annually.”
Zimmer Biomet President and CEO Bryan Hanson said, “A&E Medical’s high-growth business and innovative products are highly complementary to our current portfolio and will allow us to offer a comprehensive suite of sternal closure products, including rigid fixation, which has the potential to shift the standard of care and address a variety of unmet patient and surgical needs.”
Hanson continued, “This deal aligns with our active portfolio management strategy and the ongoing transformation of our business that will position Zimmer Biomet for long-term growth.”
While the acquisition will not impact Zimmer Biomet’s 2020 earnings, it is expected to enhance Zimmer Biomet’s portfolio. A&E Medical President and CEO Thomas Sullivan said, “We believe the addition of A&E’s leading comprehensive sternal closure products to the portfolio of Zimmer Biomet, a long-standing leader in surgical solutions, will benefit surgeons, patients and health care systems.”
In a research report, Needham & Company, LLC Senior Research Analyst Mike Matson noted that this is Zimmer Biomet’s third small acquisition as of late. Looking forward, Matson expects Zimmer Biomet to continue to engage in mergers and acquisitions. This potentially includes “acquiring higher growth and higher margin businesses.”
