Zimmer Biomet Holdings Inc. has agreed to buy Austin-based LDR Holding Corp. in a deal valued at $1 billion.
LDR Holding develops surgical technologies for patients suffering from spine disorders. They employ 200 people in Austin and over 550 people globally.
Zimmer, which is based in Warsaw, Ind., makes orthopedic reconstructive products for procedures such as knee or hip replacements.
Zimmer offered $37 a share for LDR. That offer has been approved by the boards of directors of both companies, according to a statement released Tuesday morning.
Zimmer's offer is a 64 percent increase from LDR's Monday closing price of $22.58. LDR's stock soared on Tuesday to match the amount of the purchase price.
Meanwhile, Zimmer's investors weren't as pleased with the deal and its stock sank nearly 2 percent to close at $119.43.
LDR's shares have been declining in recent months on the heels of lower-than-expected revenue and bigger-than-expected losses due to increased competition in the spinal device market.
Buying LDR allows Zimmer to expand its spine business. A Bloomberg column published Tuesday praises the deal as a smart move by Zimmer because they were able to buy LDR at a cheaper price than they would have had to pay for the medical device firm a year ago.
Zimmer Biomet is far bigger company than LDR. They had $6 billion in sales last year on profit of $147 million. They employ 17,500 people worldwide, with 8,400 employees in the United States.
Last year, LDR Holdings had $164.5 million in revenue and losses of $15.9 million. They have posted losses for the last three years, and its annual filing notes most years they have not been profitable.
It's unclear how this acquisition may impact LDR's operations in Austin. LDR CEO Chris Lavigne said in a written statement that it was "premature" to speculate about specifics.
"We have a phenomenal team at LDR that we feel has a lot to offer the combined organization," Lavigne said. "Zimmer Biomet plans to complement the spine business headquarters in Broomfield, Co. by maintaining a significant presence in LDR"s strong technology hub here in Austin."
Lavigne said that would allow Zimmer to "leverage talent and product expertise from both companies.
The transaction is expected to close in the third quarter of this year, according to the company statement.
The two LDR co-founders, Christophe Lavigne, the president and CEO, and Patrick Richard, the executive vice president and general manager of LDR Medical, will remain with the company in "key leadership positions," Zimmer said in a presentation to investors posted on its website.
LDR Holding was founded in 2000 in France and consolidated its operations in Austin in 2006.