Dive Brief:
- Zimvie is considering a sale and other options after receiving takeover approaches, Bloomberg reported Tuesday.
- Citing unnamed sources, the financial news publication said Zimvie is working with an adviser to assess its options after strategic investors and industry players showed interest in a deal. The company’s investor relations partner told MedTech Dive in an email Zimvie does not comment on market rumors or speculation.
- The report comes almost three months after Zimvie agreed to sell its spine business for $375 million and became a pure-play provider of implants and other dental products.
Dive Insight:
Zimvie separated from parent company Zimmer Biomet in 2022 with a portfolio of spine and dental devices. In December 2023, Zimvie agreed to sell its spine business to H.I.G. Capital for $375 million. Management framed the spine deal as a way to address two major concerns it had heard from investors: the lack of synergy between spine and dental and the amount of debt held by the company.
The leaner, more focused dental business that emerged from the spine split is reportedly the subject of interest from buyers. Bloomberg’s sources said the deliberations are at an early stage and Zimvie may opt against striking a deal.
Shares in Zimvie climbed nearly 23% to above $18 in the wake of the report, giving it a market capitalization of almost $490 million. The valuation makes Zimvie a potential tuck-in takeover for another medical device company, the sort of acquisition that Moody’s Ratings analysts expect to see more of in 2024.
Needham analysts estimate Zimvie could be worth $25 to $29 per share to a buyer and that acquirers could include medtech companies and private equity. The analysts speculated about potential strategic buyers in a note to investors.
“We believe Solventum is the most logical strategic buyer given that implants is a notable gap in their dental portfolio,” the analysts wrote. “That said, at the company's pre-spin investor day, management suggested that M&A would likely not be part of their standalone story for a couple of years.”
Needham analysts listed Dentsply Sirona, Envista, Henry Schein and Straumann as other potential buyers. As the top competitors for the dental implant market, the companies could face antitrust issues if they try to buy Zimvie.
The analysts said they “are not too surprised” by the report of interest in Zimvie given its portfolio and “margin expansion potential.” Zimvie’s adjusted EBITDA margin was 10.5% in the first quarter and management is aiming to increase the figure to 15% by April 2025. The company is reducing its corporate infrastructure and expenses, such as IT costs, and optimizing its manufacturing operation.
