Centerpulse favours Zimmer as profit falls
The Swiss medical devices company Centerpulse has advised shareholders to accept a $3.1 billion (SFr4.16 billion) takeover offer from the United States Zimmer company.
Centerpulse also announced that first-half net profit fell by 25 per cent to SFr71 million compared with the same period last year.
A statement on Friday from Centerpulse headquarters in Zurich said that the board of directors was recommending the Zimmer offer in light of last week’s announcement by British rival Smith and Nephew that it would not increase its offer of SFr3.26 billion.
The recommendation is conditional upon Zimmer shareholders approving the issuing of new shares as part of the consideration to be paid to Centerpulse shareholders in the offer.
The board’s recommendation is supported by an independent “fairness” report prepared by consultants KPMG.
“The combination of Centerpulse and Zimmer will create a global leader in the orthopaedic sector to the benefit of our customers and employees,” commented Centerpulse chairman and CEO Max Link.
“We are very excited about the new opportunities ahead and look forward to working with Zimmer on the successful integration of our two companies,” he added.
InCentive backing
In a related development, the board of InCentive Capital, Centerpulse’s single largest shareholder, has also recommended the acceptance of the Zimmer bid.
The investment firm has a stake of about 19 per cent in Europe’s largest producer of orthopaedic devices.
Announcing its half-year figures, Centerpulse said that despite the profit fall, its earnings before interest, tax, depreciation and amortisation (EBITDA) rose three per cent to SFr163 million.
Second-quarter net income slid by 47 per cent to SFr27 million on sales of SFr316 million.
Satisfaction
Link said that he was pleased with the half-year results.
“They demonstrate the strength and resilience of our performance and our strong position in the reconstructive, spinal and dental implant markets, notwithstanding the current uncertainty related to the bid activity for the company,” he commented.
But he warned that any delay in the takeover timetable as recommended by the Swiss Takeover Board might have a negative impact on the business.
“If the takeover process remains within the current timetable, the company can confirm the previously disclosed objectives for the full-year as follows: sales growth of at least ten per cent in local currencies and an EBITDA margin in the range of 24 to 25 per cent,” he added.
The bid offer for Centerpulse is set to expire on August 27.
swissinfo with agencies
Centerpulse is Europe’s largest producer of orthopaedics products.
The company was hit by legal action in the United States in 2001 concerning faulty hip and knee implants. It had to put aside some $918 million as a settlement.
Centerpulse was formerly called Sulzer Medica.
The board of directors of Centerpulse is urging shareholders to accept a takeover bid by the Zimmer company of Indiana.
It says the combination of the two companies will create a global leader in the orthopaedic sector.
Centerpulse first half profit has fallen by 25 per cent to SFr71 million.
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