ZimVie Inc ZIMV shares are trading higher by over 33% after the company disclosed an agreement to sell its spine business to H.I.G. Capital for $375 million.
The acquisition price comprises $315 million in cash, subject to certain customary adjustments as set forth in the agreement, and $60 million in the form of a promissory note that will accrue interest at a rate of 10% per annum, compounded semi-annually, payable in kind.
The transaction is projected to close in the first half of 2024, subject to the satisfaction or waiver of certain closing conditions, including receipt of required regulatory approvals.
The company plans to utilize the after-tax proceeds from the sale to reduce debt, consistent with the stated capital allocation priorities.
The acquisition is expected to be accretive to ZimVie's revenue growth rate, EBITDA margin, and cash flow conversion rate, streamline its operations, and sharpen its focus as a pure-play dental company in higher-growth end markets.
Vafa Jamali, President and CEO stated, "We are pleased to reach an agreement with H.I.G. Capital for the strategic sale of our core spine, motion preservation, and EBI® Bone Healing portfolio and services. Our spine business possesses an innovative portfolio, and is well positioned to continue to improve under this new ownership."
"Similarly, this transaction provides the capital to fund go-forward growth for dental's commercial and innovation platforms while reducing ZimVie's leverage profile. This transaction is intended to create a leaner, more focused ZimVie with a leading position in attractive and growing global dental markets."
Price Action: ZIMV shares are up 33.60% at $14.99 on the last check Monday.
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