SEC Form 8-K filed by Zimmer Biomet Holdings Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 28, 2025

ZIMMER BIOMET HOLDINGS, INC.

(Exact name of Registrant as Specified in Its Charter)

(574) 373-3333

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01. Entry into a Material Definitive Agreement

Agreement and Plan of Merger

On January 28, 2025, Zimmer, Inc. (“Parent” or “Zimmer”), a Delaware corporation and wholly owned subsidiary of Zimmer Biomet Holdings, Inc. (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Paragon 28, Inc., a Delaware corporation (“Paragon 28”), Gazelle Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”) and, for certain provisions of the Merger Agreement, the Company. Subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into Paragon 28 (the “Merger”), with Paragon 28 continuing as the surviving corporation and a wholly owned subsidiary of Parent.

Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of Paragon 28 common stock, par value $0.01 per share (other than shares owned by Paragon 28, Parent, Merger Sub or any of their respective subsidiaries (which shares will be canceled) and shares with respect to which appraisal rights are properly exercised and not withdrawn under Delaware law), will automatically be converted into the right to receive (i) $13.00 in cash, without interest (the “Merger Consideration”) and (ii) one contractual contingent value right pursuant to the CVR Agreement (as defined and described below, a “CVR”).

At or prior to the Effective Time, Parent, a rights agent and, for certain provisions, the Company will enter into the Contingent Value Rights Agreement in the form attached as Exhibit A to the Merger Agreement (the “CVR Agreement”).

In addition, as of the Effective Time, each stock option to purchase shares of Paragon 28 common stock (each, a “stock option”) that is outstanding and unexercised as of immediately prior to the Effective Time will vest and be cancelled, with the holder thereof becoming entitled to receive, with respect to each share of Paragon 28 common stock underlying such stock option, (i) an amount in cash, without interest, equal to the excess, if any, of (A) the Merger Consideration over (B) the per share exercise price for such stock option, and (ii) one CVR, in each case subject to applicable withholding taxes. Notwithstanding the foregoing, if the exercise price per share of Paragon 28 common stock of such stock option is equal to or greater than the sum of the Merger Consideration and the maximum Milestone Payment (as defined in the CVR Agreement), such stock option will be cancelled without any cash payment, CVR or other consideration being made in respect thereof, and if the exercise price per share of Paragon 28 common stock of such stock option is equal to or greater than the Merger Consideration, but less than the sum of the Merger Consideration and the maximum Milestone Payment (as defined in the CVR Agreement), such stock option will be cancelled and converted into the right to receive solely one CVR (where the amount payable pursuant to the CVR Agreement, if any, shall be reduced by the portion of such stock option’s per share exercise price that exceeds the Merger Consideration).

As of the Effective Time, each restricted stock unit with respect to Paragon 28 common stock subject solely to time-based vesting conditions (“RSU”) that is outstanding as of immediately prior to the Effective Time will vest and be cancelled, with the holder thereof becoming entitled to receive, with respect to each share of Paragon 28 common stock subject to such RSU, (i) an amount in cash, without interest, equal to the Merger Consideration and (ii) one CVR, in each case subject to applicable withholding taxes.

As of the Effective Time, each restricted stock unit with respect to Paragon 28 common stock subject to both performance-based and time-based vesting conditions (each, a “PSU”) that is outstanding as of immediately prior to the Effective Time will vest, as required pursuant to the award agreements applicable thereto, assuming attainment of performance goals at a level specified in the confidential disclosure letter delivered by Paragon 28 and will be cancelled, with the holder thereof becoming entitled to receive, with respect to each share of Paragon 28 common stock subject to such vested PSU, (i) an amount in cash, without interest, equal to the Merger Consideration and (ii) one CVR, in each case subject to applicable withholding taxes.

Finally, immediately prior to the Effective Time, Paragon 28’s Employee Stock Purchase Plan will be terminated and all accumulated contributions of each participant thereunder will, to the extent not used to purchase shares of Paragon 28 common stock in accordance with an accelerated exercise date pursuant to the terms and conditions of Paragon 28’s Employee Stock Purchase Plan, be refunded to such participant as promptly as practicable following the Effective Time.

The consummation of the Merger is subject to certain closing conditions, including (i) the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of Paragon 28 common stock (the “Stockholder Approval”), (ii) the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) certain other foreign regulatory approvals and (iv) the absence of any legal restraints that have the effect of preventing the consummation of the Merger. Additionally, Parent and Merger Sub’s obligations to consummate the Merger is subject to the absence of a Material Adverse Effect (as defined in the Merger Agreement) on Paragon 28 having occurred since the date of the Merger Agreement. Moreover, each party’s obligation to consummate the Merger is subject to certain other conditions, including the accuracy of the other party’s representations and warranties in the Merger Agreement (subject to certain materiality qualifiers) and the other party’s compliance in all material respects with its obligations under the Merger Agreement. Consummation of the Merger is not subject to a financing condition.

The Merger Agreement contains customary representations and warranties of each of Parent, Paragon 28 and Merger Sub relating to their respective businesses and certain matters related to the Merger Agreement. The Merger Agreement contains certain covenants, including covenants providing (i) for each of the parties to use reasonable best efforts to cause the transactions under the Merger Agreement to be consummated, (ii) for Paragon 28 to use reasonable best efforts to carry on its business in the ordinary course of business consistent with past practice during the interim period between the execution of the Merger Agreement and completion of the Merger, including using reasonable best efforts to preserve its business operations, and (iii) for Paragon 28 not to engage in certain kinds of transactions during that period without Parent’s consent.

The Merger Agreement obligates Paragon 28 to abide by customary “no-shop” restrictions on its ability to solicit alternative takeover proposals from third parties and to provide non-public information to and enter into discussions or negotiations with third parties regarding alternative takeover proposals. Notwithstanding this obligation, prior to the receipt of the Stockholder Approval, if Paragon 28 receives an unsolicited alternative takeover proposal that Paragon 28’s Board of Directors determines in good faith (after consultation with Paragon 28’s legal counsel and financial advisor) constitutes, or would reasonably be expected to lead to, a Superior Proposal (as defined in the Merger Agreement and summarized below) and that the failure to take such action would be inconsistent with its fiduciary duties under applicable law, Paragon 28 may under certain circumstances furnish information to and engage in discussions or negotiations with the third party making such alternative takeover proposal. A “Superior Proposal” generally is any bona fide written takeover proposal to acquire 50% or more of the outstanding shares of Paragon 28 common stock or of the assets of Paragon 28 and Paragon 28’s subsidiaries, which proposal did not result from a breach of the “no-shop” restrictions and, in the good faith determination of Paragon 28’s Board of Directors (after consultation with Paragon 28’s legal counsel and financial advisor), is reasonably likely to be consummated in accordance with its terms and, if consummated, would result in a transaction more favorable from a financial point of view to Paragon 28’s stockholders than the transactions under the Merger Agreement, taking into account changes to the Merger Agreement proposed by Parent in response thereto. Prior to Paragon 28 entering into a written definitive agreement for, or effecting a change in recommendation of Paragon 28’s Board of Directors in connection with, a Superior Proposal, Paragon 28 must provide Parent with advance written notice of its intention to do so and Parent will generally have at least four business days after receipt of such notice to negotiate with Paragon 28 to make such adjustments in the terms and conditions of the Merger Agreement as would permit Paragon 28’s Board of Directors not to enter into such a definitive agreement or change its recommendation.

The Merger Agreement contains certain customary termination rights for Paragon 28 and Parent, including a right to terminate the Merger Agreement if the Merger is not completed by November 28, 2025 (as such date may be extended to January 28, 2026, pursuant to the terms of the Merger Agreement, the “Outside Date”). The Merger Agreement further provides that, upon termination of the Merger Agreement under certain specified circumstances, including, among others, Paragon 28’s termination of the Merger Agreement to enter into a written definitive agreement for a Superior Proposal or following a change in recommendation of Paragon 28’s Board of Directors, Paragon 28 will be obligated to pay Parent a termination fee of $40 million.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.

The Merger Agreement has been included to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company, Paragon 28, Parent or any of their respective subsidiaries or affiliates. The representations and warranties of the parties contained in the Merger Agreement have been made solely for the benefit of the parties thereto. In addition, such representations and warranties (i) have been made only for purposes of the Merger Agreement, (ii) may be subject to limits or exceptions agreed upon by the contracting parties, (iii) are subject to materiality qualifications contained in the Merger Agreement which may differ from what may be viewed as material by investors, (iv) were made only as of the date of the Merger Agreement or other specific dates and (v) have been included in the Merger Agreement for the purpose of allocating risk between the contracting parties rather than establishing matters as facts. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, Paragon 28, Parent or Merger Sub or any of their respective subsidiaries or affiliates. Additionally, the representations, warranties, covenants, conditions and other terms of the Merger Agreement may be subject to subsequent waiver or modification. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

Contingent Value Rights Agreement

At or immediately prior to the Effective Time, Zimmer, a rights agent and, for certain provisions of the CVR Agreement, the Company, will enter into the CVR Agreement, governing the terms of the CVRs to be received by Paragon 28’s stockholders. The CVRs are not transferable except under certain limited circumstances, will not be evidenced by a certificate or other instrument and will not be registered or listed for trading. The CVRs will not have any voting or dividend rights and will not represent any equity or ownership interest in the Company, Zimmer, Merger Sub, Paragon 28 or any of their affiliates.

Each CVR represents the right to receive a cash payment of up to $1.00 per CVR. The cash payment will become payable upon achievement of Net Revenue (as defined in the CVR Agreement) in excess of $346 million during the period from January 1, 2026 through December 31, 2026 and will be determined linearly based on Net Revenue in excess of $346 million up to $361 million, with no payment being payable if Net Revenue during the applicable period is less than $346 million and the full cash payment of $1.00 per CVR being payable if Net Revenue during the applicable period is at least $361 million.

There can be no assurance that the milestone will be achieved during the relevant period, and that the resulting milestone payments will occur.

The foregoing description of the CVR Agreement is not complete and is qualified in its entirety by reference to the Form of CVR Agreement, which is attached as Exhibit A to the Merger Agreement in Exhibit 2.1, and is incorporated herein by reference.

Voting Agreement

On January 28, 2025, concurrently with the execution of the Merger Agreement, Parent and Merger Sub entered into a voting agreement (the “Voting Agreement”) with Albert DaCosta, Paragon 28’s Chairman, President and Chief Executive Officer, in his capacity as a stockholder of Paragon 28, pursuant to which, among other things, Mr. DaCosta agreed to vote all of his shares of Paragon 28 common stock beneficially owned (i) in favor of the adoption and approval of the Merger Agreement and approval of the Merger, (ii) against any takeover proposal from a third party and (iii) against any other action that is intended or could reasonably be expected to materially impede, interfere with or delay the consummation of the Merger.

The Voting Agreement will terminate upon the earliest of (i) the valid termination of the Merger Agreement in accordance with its terms, (ii) the Effective Time, (iii) a material modification or amendment to the Merger Agreement, without the consent of Mr. DaCosta, that reduces the amount, changes the form or otherwise affects the consideration payable under the Merger Agreement, and (iv) the mutual consent of the parties.

The foregoing description of the Voting Agreement and the transactions contemplated thereby is not complete and is qualified in its entirety by reference to the form of Voting Agreement, a copy of which is filed as Exhibit 99.1 hereto and the terms of which are incorporated herein by reference.

Offer Letter

In connection with the execution of the Merger Agreement, Mr. DaCosta, entered into an offer letter with the Company (the “Offer Letter”). Pursuant to the terms of the Offer Letter, subject to and effective as of the closing date of the Merger, Mr. DaCosta will hold the position of Global President, Foot and Ankle.

Forward-Looking Statements

This communication, and any documents to which the Company refers in this communication, contain not only historical information, but also forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include the words “forecast,” “expect,” “believe,” “will,” “intend,” “plan,” and words of similar substance. Such forward-looking statements include the expected completion and timing of the proposed transaction and other information relating to the proposed transaction. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or performance to differ materially from those expressed in or contemplated by the forward-looking statements, including the following: (i) risks related to the satisfaction of the conditions to closing the Merger (including the failure to obtain necessary regulatory approvals) in the anticipated timeframe or at all, including uncertainties as whether the stockholders of Paragon 28 will approve the acquisition and the possibility that the acquisition does not close; (ii) risks related to the possibility that competing offers or acquisition proposal for Paragon 28 will be made; (iii) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (iv) risks related to the ability to realize the anticipated benefits of the Merger, including the possibility that the expected benefits from the Merger will not be realized or will not be realized within the expected time period; (v) the risk that the businesses will not be integrated successfully; (vi) risks relating to the achievement, in part or at all, of the revenue milestone necessary for the payment of any contingent value rights; (vii) disruption from the pending Merger making it more difficult to maintain business and operational relationships, including with customers, vendors, service providers, independent sales representatives, agents or agencies; (viii) risk related to the pending Merger diverting Company management’s attention from the ongoing business operations of its business; (ix) negative effects of the announcement of the Merger or the consummation of

the Merger on the market price the Company’s common stock and on the Company’s operating results; (x) significant transaction costs; (xi) unknown liabilities; (xii) the risk of litigation, including shareholder litigation, and/or regulatory actions, including any conditions, limitations or restrictions placed on approvals by any applicable governmental entities, related to the Merger; and (xiii) (A) other risks and uncertainties discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and the Company’s subsequent Quarterly Reports on Form 10-Q (in particular, the risk factors set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in such Annual Report and Quarterly Reports), and (B) other risk factors identified from time to time in other filings with the U.S. Securities and Exchange Commission (the “SEC”).

The list of factors that may affect actual results and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive. Readers are cautioned not to place undue reliance on any of these forward-looking statements. These forward-looking statements speak only as of the date hereof. The Company undertakes no obligation to update any of these forward-looking statements as the result of new information or to reflect events or circumstances after the date of this communication or to reflect actual outcomes, expect as required by law, and expressly disclaims any obligation to revise or update any forward-looking statement to reflect future events or circumstances.

Additional Information about the Proposed Transaction and Where to Find It

In connection with the proposed transaction, Paragon 28 will be filing documents with the SEC, including preliminary and definitive proxy statements relating to the proposed transaction. The definitive proxy statement will be mailed to Paragon 28’s stockholders in connection with the proposed transaction. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PRELIMINARY AND DEFINITIVE PROXY STATEMENTS AND ANY OTHER DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED MERGER OR INCORPORATED BY REFERENCE IN THE PROXY STATEMENT WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders may obtain free copies of these documents (when they are available) and other related documents filed with the SEC at the SEC’s web site at www.sec.gov, and on Paragon 28’s website at www.paragon28.com. In addition, the proxy statement and other documents may be obtained free of charge by directing a request to Paragon 28, Inc., Robert McCormack, 14445 Grasslands Drive, Englewood, Colorado, telephone: (720) 912-1332.

Participants in the Solicitation

The Company and Paragon 28 and their respective directors and executive officers may be deemed participants in the solicitation of proxies from the stockholders of Paragon 28 in connection with the proposed transaction. Information regarding the Company’s directors and executive officers can be found in the Company’s definitive proxy statement filed with the SEC on March 27, 2024. Information regarding Paragon 28’s directors and executive officers can be found in Paragon 28’s definitive proxy statement filed with the SEC on April 5, 2024. Additional information regarding the interests of Paragon 28’s directors and executive officers in the proposed transaction will be included in the proxy statement described above. These documents are available free of charge at the SEC’s web site at www.sec.gov, on the Company’s website at www.zimmerbiomet.com and on Paragon 28’s website at www.paragon28.com.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.