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ZB's investment strategy with the P28 acquisition

31 Jan 2025 · 0 min

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0:13

In this segment of the YouTube discussion, the participants evaluate Zimmer’s competitive standing against MAKO and dissect the financial rationale behind the P28 acquisition. Speaker A notes Zimmer’s recent struggles versus MAKO, implying a need for a strategic win. Speaker B outlines the deal’s financials: $250 M in annual revenue, a cumulative $3 B revenue projection, and a $1 B purchase price, suggesting a discounted cash flow or net present value analysis to assess the investment. Speaker C references Ivan Tornos’s presentation at JPM, which states that ZB targets a mid‑single‑digit return on invested capital over a five‑year horizon for acquisitions. The conversation blends competitive analysis with concrete valuation metrics and strategic return expectations.

And Zimmer hasn't exactly been winning against MAKO. Um, so I think you're right, they're looking for a win here of some sort. Whether it materializes in reality, only time will tell.
Yeah. Is there a, is there a generic ROI time horizon? It's $250 million in annual revenue right now. That ends up being cumulatively $3 billion. So we'll pay $1 billion in today's money for it. So yeah, you would probably do like discounted cash flow or like net present value, something like that.
In his presentation at JPM, Ivan Tornos actually said that they were looking for mid-single-digit return over invested capital numbers over 5 years for acquisitions.