Zimmer ($ZMH) will close its Carlsbad, CA, dental headquarters following its looming $13 billion merger with Biomet, resulting in an unspecified number of layoffs. The plant closure will occur in 12 months, say internal company emails sent to both companies' employees that were obtained by FierceMedicalDevices.
The new company's dental headquarters will be consolidated into Biomet's dental headquarters in Palm Beach Gardens, FL. Distribution operations will be relocated to Palm Beach Gardens, while manufacturing will be transferred to other company sites and outside suppliers.
"Consolidating the operations will allow us to gain efficiency as well as leverage the combined companies best-in-class technologies and operations expertise going forward," the email says. "In addition, we will optimize our cost structure by maximizing our capital utilization while continuing to improve our customer experience. Finally, consolidating our footprint will allow us to effectively work closely with our development teams and support product innovations."
It continues: "This will be a challenging time for Zimmer Dental and Biomet 3i (the company's dental subsidiary) and will be especially difficult for the individuals affected by these planned actions. These changes will be conducted in a fair and transparent manner, and anyone impacted will be offered severance benefits and outplacement services to support their transition."
It is not yet clear if any of the cuts from the facility closure involve sales staff, although Zimmer CEO David Dvorak has pledged not to lay off any salespeople during the integration process.
Upon closure, the company's dental business will double in size. It had net sales of $242 million in 2014, compared with annual net sales of $259 million at Biomet's dental unit. The companies sell a variety of dental implants and related devices, including drill bits, abutments and specialized screws. Zimmer also sells oral scanners and related software.
Biomet canceled plans to spin off its dental business just prior to its deal April 2014 deal with Zimmer.
The internal announcement about the Carlsbad facility indicates that the completion of the Biomet transaction is now a formality. It came on the same day that Zimmer announced plans to divest three products in the U.S. to satisfy the Federal Trade Commission, which oversees antitrust issues.
The acquisition is expected to close in mid-June.
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