Four large orthopedic device companies and one multidisciplinary giant, Johnson & Johnson (JNJ), are active in this field. In addition to Biomet and Smith & Nephew, which have similar market caps of around $9-10 billion, there is Zimmer Holdings Inc. (ZMH), which has a market cap of $18 billion, and Stryker Corp. (SYK), whose market cap exceeds $22 billion. According to reports, any of these four as well private funds could make a bid for Biomet.
Biomet’s impending sale is no surprise. The fact that it is imminent was made clear during Friday’s trading when Biomet touched an annual high of $40. It reached an all-time high of $50 a share two years ago, but it is believed that the acquisition will close at $45. Last April, Biomet’s CEO and co-founder, Dane A. Miller, stepped down, and the company hired investment bank Morgan Stanley to find it a buyer.
I have a special sentiment for this company. When I first started out on Wall Street 20 years ago, I learned through Biomet that if you are sitting on shares of a company that is excellent in every respect -- market, products and management -- you’ve nothing to worry about if Wall Street enters a downturn, however acute it may be. If you can, be brave, overcome your fear and load up with as many shares as you can, because the recovery will come.
I bought Biomet stock in September 1987 at $1.50 a share (adjusted for splits at that time). After I saw it plummet to $0.75 with the phenomenal crash that happened in the following month, I kissed my money goodbye. I sold it with a sigh of relief in November, only to weep when I saw it back up at $15 at the end of 1991.
BMET 1-year chart:
Published originally by Globes [online], Israel business news - www.globes.co.il © Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.
Disclosure: Shlomi Cohen holds a position in BMET