Layoffs: Zimmer aims to ‘keep everybody’ following $13.3B Biomet mega-merger (Mass Device)
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Zimmer is poised to become the 2nd-largest player in the orthopedics space by absorbing Biomet, and the company expects to need the entire sales force of both companies.
Zimmer (NYSE:ZMH) president & CEO David Dvorak is looking to avoid layoffs as much as possible following the pending mega-merger with long-time rival Biomet.
Both companies run their own independent distributor networks and Dvorak said he aims to keep both, expecting that the combined portfolio of Zimmer and Biomet products will provide “plenty for those sales reps to do.”
He hasn’t worked out the details yet, but the companies have set up an “integration steering committee” to help figure out how to merge the networks without creating unnecessary redundancies. Zimmer also said that it would form teams to assist with the integration and look for best practices at each firm to maintain following the merger.
“Every one of these reps is going to have a broader bag and every one of these reps is a value creator today. Otherwise they wouldn’t be in those positions,” Dvorak said during a call with analysts. “That business and service requirement is not going to go away. In fact, the bag’s going to get bigger and their opportunities for cross-sell and deeper penetration are going to be expanded.”
Anonymous posters at CafePharma’s Biomet messaging boards have been skeptical of promises to keep employees despite areas of obvious overlap.
“Don’t fall for euphemisms and BS statements about respecting people, etc,” one contributor wrote. “It will be a bloodbath as they ‘eliminate redundancies’, and ‘streamline operations’.”
J.P. Morgan analyst Mike Weinstein pressed Dvorak during the recent conference call, asking how he plans to manage sales reps used to calling on the same physicians. Dvorak responded that it’s too soon to get into specifics about how the new sales force might be organized, but insisted that retaining talent is a primary driver.
“I think that if you spend the time in the field and have a close first hand understanding of how hard these people work and what they do to sell, to service, to partner with their customers, in a manner than ensures that the best possible patient outcome is realized you would understand that there’s a lot of effort and energy that goes into that,” Dvorak responded. “One of the major reasons for the transaction is the talent that resides within the Biomet sales force on a global basis. And I am sure that we are going to be able to leverage that.”
Zimmer announced last month that it would acquire privately held orthopedics giant Biomet in a deal valued at $13.3 billion, changing the skyline of the orthopedics industry. Zimmer estimated that the transaction will close in the 1st quarter of 2015 and that the deal would boost its status from 3rd to 2nd place in the orthopedics world, finally surpassing rival Stryker (NYSE:SYK).
ZMH stock has gained about 10.5% since the announcement, and was trading at $101.04 at about 12:10 p.m. EST today.