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While the stock of Austin, Texas.-based spine device maker LDR Holdings has leaped in value by 60 percent in the wake of its proposed sale to Zimmer Biomet Holdings of Warsaw, Indiana, for around $1 billion, it must feel like déjà vu all over again in the Texas capital.
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LDR would be the third Austin company Zimmer has purchased in the last 13 years. An article by the Austin American-Statesman pointed out that Zimmer has twice before bought local firms, only to close and consolidate operations in the years after the sale, costing the city more than 500 jobs.
LDR leaders touted the sale as beneficial to both companies.
“LDR is very enthusiastic regarding the potential of the combined enterprise with Zimmer Biomet,” said Joseph Ross, executive vice president of global marketing for LDR Spine.
“With regard to the future of the current LDR business locations, we are confident in, and support the communication from Zimmer Biomet that they intend to complement their spine headquarters in Broomfield, Colorado, by also maintaining a significant presence in Austin, Texas, and also in Troyes, France.”
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Perhaps in response to local skepticism, Adam Johnson, president of Zimmer’s spine division, wrote to LDR employees on June 7 to reassure them that LDR co-founders Christophe Lavigne, the company’s chairman, president and CEO, and Patrick Richard, executive vice president and general manager of LDR Medical, “will remain with the company in key leadership positions within the global spine business.”
Johnson wrote that the merger “will create a spine company with the scale, talent and technology portfolio to become a leader in the $10 billion global spine market. In addition, the combined company will immediately be more competitively positioned in the fast growing cervical disc replacement (CDR) segment.”
Zimmer Biomet, which operates in more than 25 countries, designs, manufactures and markets orthopedic, reconstructive and other surgical technologies and devices.
“Together, this combination will position our spine franchise with a promising runway for sustainable growth via global market share expansion and uniquely differentiated technology,” Johnson continued. “The combination of these businesses will only reach its potential if both teams are committed to our success.”
While Johnson did not specify the size of that “significant presence” or identify how many jobs would remain or leave, he did say: “Our businesses are highly complementary. As smaller players, the combination of LDR and Zimmer Biomet will provide growth opportunities for both companies’ product lines.”
Johnson said he expects the deal to close in the third quarter of 2016.
“Until then, it is business as usual and Zimmer Biomet and LDR will continue to operate as separate companies. Bringing our two companies together will require a thoughtful integration plan, a process Zimmer Biomet has executed successfully in the past. Importantly, we’ve only just announced the planned merger and no integration decisions have been made at this time”
He said Zimmer is committed “to treating everyone fairly throughout the integration process, consistent with Zimmer Biomet’s corporate values.”
No one from Austin Mayor Steve Adler’s office returned calls seeking comment about the LDR sale and the loss of jobs and tax revenue following previous Zimmer purchases.
