Biomet Goes Private Equity

At $44 a share. Here’s the press release:

Biomet, Inc. to Be Acquired by Private Equity Consortium for $10.9 Billion or $44 Per Share in Cash
WARSAW, Ind.–Biomet, Inc. a worldwide leader in the design and manufacture of musculoskeletal medical products, announced today that it has entered into a definitive merger agreement to be acquired by a private equity consortium in a transaction with a total equity value of approximately $10.9 billion. The consortium includes affiliates of the Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co. and TPG.
Under the terms of the merger agreement, Biomet shareholders will receive $44 per common share, representing a 27% premium over Biomet’s closing price on April 3, 2006, the trading day prior to public speculation, which was subsequently confirmed by Biomet on April 6, 2006, that it had retained Morgan Stanley to assist it in exploring strategic alternatives.
The board of directors of Biomet has unanimously approved the merger agreement; the merger and the transactions contemplated thereby, and will also recommend approval by Biomet’s shareholders.
The transaction will be financed through a combination of equity contributed by the private equity consortium and debt financing that has been committed by Bank of America and Goldman Sachs. There is no financing condition to the obligations of the private equity consortium to consummate the transaction.

I’m not happy with this price, and I think it’s a lousy idea. This is just $2 a share above Friday’s close, and it’s lower than where Biomet was two years ago. Earlier I said that $45 a share was a minimum, but I didn’t think the board would consider anything below that. I don’t see how this deal helps shareholders.
If I were in Medtronic’s shoes, I would consider making an offer. The worst they can say is no.
Update: Speaking of Medtronic, Barron’s had a good piece on the stock last week.

Posted by on December 18th, 2006 at 8:20 am


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