Zimmer Biomet Holdings Inc. (ZBH) has entered into an agreement to acquire all outstanding shares of common stock of Paragon 28 Inc. (FNA) at an initial payment of $13.00 per share in cash. This transaction translates to an equity valuation of approximately $1.1 billion and an enterprise value around $1.2 billion.
Paragon 28 shareholders will also be granted a non-tradeable contingent value right (CVR), allowing them to receive up to an additional $1.00 per share in cash if specific revenue targets are met. The CVR becomes payable, either fully or partially, if net sales surpass $346 million and could reach up to $361 million during Zimmer Biomet's fiscal year 2026.
The boards of directors for both Zimmer Biomet and Paragon 28 have unanimously endorsed this transaction.
Zimmer Biomet anticipates the acquisition will immediately boost its revenue growth. Paragon 28 has forecasted its net revenue for the full year of 2024 to fall between $255.9 million and $256.2 million, marking an increase of 18.2% to 18.4% compared to the previous fiscal year.
The impact of financing considered, Zimmer Biomet projects the transaction to be approximately 3% dilutive to adjusted earnings per share in 2025, about 1% dilutive to 2026 adjusted earnings per share, and expects it to become accretive to adjusted earnings per share within 24 months post-completion.
To finance this acquisition, Zimmer Biomet plans to utilize a combination of its existing cash reserves and other available debt financing options.
The completion of this transaction is expected to occur in the first half of 2025.
