3.	Business Combinations

Biomet Merger

We completed our merger with LVB, the parent company of Biomet, on June 24, 2015. We paid $12,030.3 million in cash and stock and assumed Biomet’s senior notes. The total amount of merger consideration utilized for the acquisition method of accounting, as reduced by the merger consideration paid to holders of unvested LVB stock options and LVB stock-based awards of $90.4 million, was $11,939.9 million.

The following table sets forth unaudited pro forma financial information derived from (i) the audited financial statements of Zimmer for the year ended December 31, 2015; and (ii) the unaudited financial statements of LVB for the period January 1, 2015 to June 23, 2015. The pro forma financial information has been adjusted to give effect to the merger as if it had occurred on January 1, 2014.

Pro Forma Financial Information

(Unaudited)

	Year Ended December 31, 2015
	(in millions)
Net Sales	$	7,517.8
Net Earnings	$	330.2

These unaudited pro forma results have been prepared for comparative purposes only and include adjustments such as inventory step-up, amortization of acquired intangible assets and interest expense on debt incurred to finance the merger. Material, nonrecurring pro forma adjustments directly attributable to the Biomet merger include:

•

The $90.4 million of merger compensation expense for unvested LVB stock options and LVB stock-based awards was removed from net earnings for the year ended December 31, 2015 and recognized as an expense in the year ended December 31, 2014.

•

The $73.0 million of retention plan expense was removed from net earnings for the year ended December 31, 2015 and recognized as an expense in the year ended December 31, 2014.

•

Transaction costs of $17.7 million were removed from net earnings for the year ended December 31, 2015 and recognized as an expense in the year ended December 31, 2014.

LDR Acquisition

On July 13, 2016, we completed our merger with LDR. We paid cash of $1,138.0 million. The total amount of merger consideration utilized for the acquisition method of accounting, as reduced by the merger consideration paid to holders of unvested LDR stock options and LDR stock-based awards of $24.1 million, was $1,113.9 million.

The addition of LDR provided us with an immediate position in the growing cervical disc replacement (“CDR”) market. The combination positioned us to accelerate the growth of our Spine business through the incremental revenues associated with entry into the CDR market and cross-portfolio selling opportunities to both Zimmer Biomet and LDR customer bases. The goodwill was generated from the operational synergies and cross-selling opportunities we expected to achieve from our combined operations. None of the goodwill is deductible for tax purposes.

The following table summarizes the final estimated fair value of the assets acquired and liabilities assumed at the closing date of the LDR merger (in millions):


	Final Values
Cash	$	92.8
Accounts receivable, net		30.5
Inventory		97.0
Other current assets		5.6
Property, plant and equipment		24.7
Intangible assets not subject to amortization:
In-process research and development (IPR&D)		2.0
Intangible assets subject to amortization:
Technology		447.0
Customer relationships		122.0
Trademarks and trade names		74.0
Other assets		73.8
Goodwill		507.2
Total assets acquired		1,476.6
Current liabilities		122.5
Long-term debt		0.5
Deferred taxes		236.7
Other long-term liabilities		3.0
Total liabilities assumed		362.7
Net assets acquired	$	1,113.9

We have not included pro forma information and certain other information under GAAP for the LDR acquisition because it did not have a material impact on our financial position or results of operations.

Other Acquisitions

During the year ended December 31, 2016, we completed individually immaterial acquisitions of companies including Cayenne Medical, Inc. (“Cayenne Medical”), a sports medicine company, Compression Therapy Concepts, Inc. (“CTC”), a provider of non-invasive products for the prevention of deep vein thrombosis, CD Diagnostics, Inc. (“CD Diagnostics”), a medical diagnostic testing company, and MedTech SA (“MedTech”), a designer and manufacturer of robotic equipment for brain and spine surgeries. The total aggregate cash consideration was $441.7 million. These acquisitions were completed primarily to expand our product offerings. We have assigned a fair value of $58.0 million for settlement of preexisting relationships and additional payments related to these acquisitions that are contingent on the respective acquired companies’ product sales, commercial milestones and certain cost savings. The fair value of the aggregate contingent payment liabilities was calculated based on the probability of achieving the specified sales growth, cost savings and commercial milestones and discounting to present value the payments. The goodwill was generated from the operational synergies and cross-selling opportunities we expected to achieve from the technologies acquired. None of the goodwill related to these acquisitions is deductible for tax purposes.

The following table summarizes the aggregate final estimated fair value as of the respective closing dates of the assets acquired and liabilities assumed related to the Cayenne Medical, CTC, CD Diagnostics, MedTech, and other immaterial acquisitions that occurred during the year ended December 31, 2016 (in millions):

Current assets	$	66.4
Property, plant and equipment		4.5
Intangible assets		172.9
Goodwill		337.1
Other assets		38.2
Total assets acquired		619.1
Current liabilities		20.0
Long-term liabilities		99.4
Total liabilities assumed		119.4
Net assets acquired	$	499.7

We have not included pro forma information and certain other information under GAAP for the Cayenne Medical, CTC, CD Diagnostics, or MedTech acquisitions because, individually and in aggregate, they did not have a material impact on our financial position or results of operations.