The transaction is subject to customary closing conditions and regulatory approvals, and is expected to close in the first quarter of 2015.

The combination is expected to form an orthopedics giant in the $45bn musculoskeletal industry.

Zimmer president and CEO David Dvorak said this is a milestone combination that brings together two highly complementary organizations and is consistent with company’s mission to lead the industry in delivering value to healthcare providers, their patients and stockholders.

"We believe that current demographic and macroeconomic trends affecting the healthcare industry will reward companies that successfully partner with other key stakeholders to improve patient care in a cost-effective manner," Dvorak added.

"We have a great deal of respect for what the management team and employees have accomplished at Biomet, and we are confident in their ability to be a very important part of the combined organization as we bring our two world-class companies together and cement Warsaw, Indiana as the musculoskeletal innovation capital of the world."

The combined company will be based in Warsaw, Indiana, and conduct business under a consolidated name that will leverage the strengths of both brands.

Dvorak will be the president and CEO of the company, while two representatives of Biomet’s principal stockholders will join the board, which will be expanded accordingly.

Biomet president and CEO Jeffrey R. Binder said the combination with Zimmer will prepare the company to compete as a stronger entity in the medical device industry of the future.

"Our combined scale will extend the reach and influence with which we pursue our common passion: delivering products and services that benefit our customers and the patients we ultimately serve," Binder added.

"With today’s announcement we are now additionally committed to blending and maximizing the best of our combined talents, capabilities, technologies and cultures to bring to life a great new company."

Zimmer was advised by Credit Suisse and received legal advice from White & Case. Biomet was advised by Bank of America Merrill Lynch and Goldman Sachs, and received legal advice from Cleary Gottlieb Steen & Hamilton and Weil, Gotshal & Manges.