DEFM14A: Monogram Technologies to Merge with Zimmer Biomet

Monogram Technologies Inc. stockholders are invited to a special meeting on September 30, 2025, to vote on a proposed merger with Zimmer Biomet Holdings, Inc., offering $4.04 cash plus contingent value rights per common share.

Summary

• Monogram Technologies Inc. (the Company) will merge with Honey Badger Merger Sub, Inc., a wholly-owned subsidiary of Zimmer Biomet Holdings, Inc. (Zimmer Biomet), with Monogram surviving as a wholly-owned subsidiary.
• Common stockholders will receive $4.04 in cash per share and one contractual, non-tradeable Contingent Value Right (CVR) per share.
• CVRs offer potential additional cash payments upon achievement of five milestones: $1.04 (First Milestone), $1.08 (Second Milestone), up to $3.41 (Third Milestone), up to $3.41 (Fourth Milestone), and up to $3.43 (Fifth Milestone), totaling a maximum of $12.37 per CVR.
• The total potential merger consideration for common stock, including cash and maximum CVRs, is $16.41 per share.
• Series D Preferred Stock holders will receive $2.25 per share plus accrued dividends (none outstanding as of the proxy date).
• Series E Redeemable Perpetual Preferred Stock holders will receive $100.00 per share in cash.
• The Company's Board of Directors unanimously determined the merger to be advisable, fair, and in the best interests of the Company and its stockholders, recommending a 'FOR' vote on the merger agreement proposal.
• A special meeting of stockholders will be held virtually on September 30, 2025, at 1:00 p.m. Eastern Time, with a record date of August 14, 2025.
• Approval of the merger agreement requires the affirmative vote of a majority of outstanding common stock entitled to vote.
• Certain specified stockholders, including executive officers and directors, collectively holding approximately 24.01% of common stock, have entered into voting agreements to vote in favor of the merger.
• Wells Fargo Securities, LLC, the Company's financial advisor, rendered an opinion that the merger consideration is fair, from a financial point of view, to common stockholders.
• The merger is expected to be consummated during the second half of 2025, subject to stockholder and regulatory approvals.
• If the merger is not consummated, Monogram may be obligated to pay Zimmer Biomet an $11 million termination fee under certain circumstances.
• Monogram entered into a delayed draw loan agreement with Zimmer, Inc. (a Zimmer Biomet subsidiary) for up to $15 million, available if the merger is not consummated between December 1, 2025, and the end date.

Sentiment

Score: 8

Explanation: The sentiment is largely positive due to the Board's unanimous recommendation, the premium offered over recent trading prices, and the strategic benefits of joining Zimmer Biomet. The CVRs offer potential upside, mitigating some concerns about immediate valuation. While there are inherent risks and ongoing litigation, the overall tone suggests a favorable outcome for stockholders compared to the standalone risks.

Positives

• The merger provides immediate and certain value and liquidity to common stockholders through a $4.04 cash payment per share.
• Contingent Value Rights (CVRs) offer common stockholders the opportunity to participate in additional potential upside, with up to $12.37 per CVR if specified commercial and regulatory milestones are achieved.
• The upfront cash consideration of $4.04 per share represents a premium of approximately 22% over the closing share price on July 10, 2025, and 44% over the 30-day volume-weighted average share price on the same date.
• The Board believes the merger will significantly accelerate the adoption of Monogram's robotic technology by leveraging Zimmer Biomet's global scale, commercial infrastructure, and established implant portfolio.
• Access to Zimmer Biomet's highly trained global sales force and extensive clinical experience is expected to support the entry of Monogram's products into new clinical indications and accelerate broader adoption.
• Zimmer Biomet's financial strength and capital resources are expected to provide the necessary support for Monogram's operations and growth strategy, addressing the Company's need for substantial future funding.
• The merger is not subject to a financing condition, providing greater certainty of closing.
• The merger agreement includes provisions for specific performance, allowing the Company to seek enforcement of Zimmer Biomet's obligations to consummate the merger.

Negatives

• CVRs are non-tradeable and there is no guarantee that any milestone payments will be received, as achievement is subject to future performance and regulatory clearances.
• Common stockholders will have no ongoing equity interest in the surviving corporation, limiting participation in future earnings or growth beyond the CVRs.
• The exchange of Company common stock for merger consideration (cash and CVRs) will be a taxable transaction for U.S. federal income tax purposes, with uncertainty regarding CVR tax treatment.
• The Company faces litigation from purported stockholders alleging disclosure deficiencies in the preliminary proxy statement and seeking to enjoin the merger.
• If the merger is not consummated, the Company may be obligated to pay Zimmer Biomet an $11 million termination fee.
• The Company's standalone business plan entailed years of substantial funding and potential significant dilution to existing stockholders from future equity financing.
• The Company has not historically been profitable and may not be able to achieve or sustain profitability on a standalone basis.
• The Company reported a net loss of $3.2 million in Q1 2025 and had $11.9 million in working capital as of March 31, 2025, indicating limited internal resources for its growth strategy.

Risks

• Risks related to the satisfaction of closing conditions, including obtaining necessary regulatory approvals, in the anticipated timeframe or at all.
• The possibility that competing offers or acquisition proposals for the Company will be made.
• The occurrence of any event, change, or other circumstances that could give rise to the termination of the merger agreement, potentially requiring the Company to pay a termination fee.
• Risks related to the ability to realize the anticipated benefits of the merger, including the possibility that expected benefits will not be realized or not within the expected time period.
• The risk that the businesses will not be integrated successfully.
• Risks relating to changing demand for the Company's existing products.
• Risks relating to the achievement, in part or at all, of the revenue and other milestones necessary for the payment of any CVRs.
• Disruption from the merger making it more difficult to maintain business and operational relationships, including with customers, vendors, service providers, agents or agencies, and the Company's ability to attract, motivate or retain key executives, employees and other associates.
• Risks related to the merger diverting the Company's management's attention from ongoing business operations.
• Negative effects of the announcement or consummation of the merger on the market price of the Company common stock and on the Company's operating results.
• Significant transaction costs.
• Unknown liabilities.
• The risk of litigation, including stockholder litigation, and/or regulatory actions, including any conditions, limitations or restrictions placed on approvals by any applicable governmental entities, related to the merger.
• The potential upside in the Company's standalone strategic plan.
• The potential of continuing to pursue a strategic transaction with Party C (another interested party).
• The trading price of Company common stock may decline if the merger does not close, to the extent that the market price currently reflects positive market assumptions that the merger will be consummated.
• Reputational harm to the Company's relationships with investors, customers, suppliers, business partners and other third parties due to the adverse perception of any failure to successfully complete the merger.
• The fact that the Company has not historically been profitable and may not be able to achieve or sustain profitability.
• The possibility that the merger, even if approved by the Company's common stockholders, will not be consummated by the end of the second half of 2025 due to delays in receiving required regulatory approvals, and may be consummated as late as April 11, 2026.

Future Outlook

The Company and Zimmer Biomet anticipate completing the merger during the second half of 2025, subject to stockholder and regulatory approvals. Post-merger, Monogram Technologies will operate as a wholly-owned subsidiary of Zimmer Biomet, with its securities delisted from Nasdaq and deregistered under the Exchange Act. The future value for common stockholders is tied to the achievement of CVR milestones, which are contingent on regulatory clearances and specific revenue targets through 2030. The Company's internal forecasts project a path to profitability and positive unlevered free cash flow by 2030, but these are subject to significant uncertainties.

Management Comments

• The Board believes the merger with Zimmer Biomet helps significantly accelerate the adoption of Monogram's robotic technology by leveraging Zimmer Biomet's global scale, commercial infrastructure, and market access.
• Monogram's products are expected to benefit from access to Zimmer Biomet's highly trained global sales force, which possesses deep clinical subject matter expertise and strong established relationships with key opinion leaders and high-volume surgeons.
• Zimmer Biomet's extensive clinical experience across a wide range of orthopedic procedures will support the entry of Monogram's products into new clinical indications and accelerate broader adoption of the technology.
• Zimmer Biomet would be able to provide the significant capital resources, sales and commercial support, and clinical infrastructure necessary to compete and scale operations effectively in the global orthopedic robotics market.
• The upfront cash consideration provides immediate and certain value and liquidity, eliminating exposure to the risks and uncertainties of Monogram's standalone strategy, while CVRs provide participation in additional potential upside.
• The Board's assessment of the potential risks, rewards, and uncertainties associated with remaining an independent public company led to the determination that such alternative did not represent a more attractive option than the proposed merger.

Industry Context

The merger positions Monogram Technologies, an AI-driven robotics company specializing in orthopedic surgery, within Zimmer Biomet, a global medical technology leader. This integration is expected to leverage Zimmer Biomet's established market presence, sales force, and capital resources to accelerate the commercialization and adoption of Monogram's next-generation surgical robot and implants. This aligns with broader industry trends of consolidation and the increasing integration of advanced technologies like AI and robotics into medical procedures, particularly in high-growth segments like orthopedics. The acquisition by a larger, established player like Zimmer Biomet could provide the necessary scale and infrastructure for Monogram's innovative technology to compete effectively against other well-capitalized market leaders in the continuously evolving orthopedic robotics market.

Comparison to Industry Standards

• The Board considered the execution risk of a competing proposal from 'Party C', noting a 41% year-to-date reduction in Party C's common stock trading price, which suggested greater market risk compared to Zimmer Biomet's proposal.
• The Board also assessed whether 'Party C' would have sufficient financial resources to support Monogram in achieving CVR milestones, and whether Party C's stockholders would respond favorably to an acquisition announcement, potentially impacting its ability to obtain financial resources.
• The termination fee of $11 million payable by Monogram is considered comparable to termination fees in transactions of a similar size, suggesting it is within industry norms and not likely to deter competing bids.

Management Changes

Corporate Governance

Legal Proceedings

• A lawsuit was filed on August 13, 2025, by two purported Company stockholders in the U.S. District Court for the Northern District of Indiana, South Bend Division, against Monogram and its Board.
• The lawsuit alleges that the preliminary proxy statement filed on August 11, 2025, is false and misleading and/or omits material information, violating Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9.
• The lawsuit seeks monetary damages and to enjoin the Company and the Board from proceeding with the stockholder approval or consummating the merger.
• Between August 15, 2025, and August 28, 2025, the Company received seven demand letters from purported stockholders alleging disclosure deficiencies in the preliminary proxy.
• Monogram and its Board believe the claims asserted are without merit and intend to vigorously defend against the lawsuit and the demand letters.

Related Party Transactions

• Benjamin Sexson (CEO) is delivering a waiver and release with respect to certain preemptive rights granted under his existing employment agreement, conditioned upon the merger.
• Benjamin Sexson and Kamran Shamaei (CTO) are executing new employment agreements or offer letters with Zimmer Biomet, effective at the Effective Time.
• Benjamin Sexson, Kamran Shamaei, and Douglas Unis (CMO) are executing non-competition and non-solicitation agreements with Zimmer Biomet.
• Certain specified stockholders, including Benjamin Sexson, Douglas Unis, and Kamran Shamaei, entered into voting and support agreements with Zimmer Biomet and Merger Sub.
• Dr. Douglas Unis is entitled to a portion of shares of Company common stock (487,324 shares) owed to Icahn School of Medicine at Mount Sinai (Mount Sinai) under a separate agreement, and a portion of the termination payment payable under the Sinai Termination Agreement. Monogram entered into a termination agreement with Mount Sinai on July 9, 2025, to terminate an existing license agreement and resolve potential claims.

Stakeholder Impact

• **Shareholders (Common Stock)**: Will receive $4.04 cash per share and CVRs, providing immediate liquidity and potential future payments based on milestones. They will no longer hold equity in Monogram post-merger.
• **Shareholders (Preferred Stock)**: Will receive specified cash liquidation preferences ($2.25 for Series D, $100 for Series E) and will no longer hold equity.
• **Employees**: Current employees will receive written offers of employment from Zimmer Biomet or its affiliates, with comparable base salary/wage rate and substantially similar target annual cash incentive opportunities for one year post-closing. Service credit for eligibility and vesting in Zimmer Biomet plans will be provided. Executive officers (Sexson, Shamaei) have new offer letters and restrictive covenants with Zimmer Biomet. Pro-rated 2025 bonuses may be paid.
• **Customers/Suppliers/Business Partners**: Potential disruption to relationships and distraction of management during the merger process, but the Board believes Zimmer Biomet's scale will enhance product awareness and adoption.
• **Creditors**: The delayed draw loan agreement provides Monogram with access to up to $15 million if the merger is not consummated, offering a financial backstop.
• **Regulatory Bodies**: The merger is subject to HSR Act and other regulatory approvals, which are expected to be obtained in H2 2025. The parties are committed to using reasonable best efforts to secure these approvals.

Next Steps

• Monogram common stockholders will vote on the merger agreement proposal and an adjournment proposal at a special meeting on September 30, 2025.
• The Company and Zimmer Biomet will continue to seek required regulatory approvals, with HSR Act waiting period expected to expire on September 5, 2025.
• If approved, the merger is expected to be consummated during the second half of 2025.
• Upon consummation, Monogram's securities will be delisted from the Nasdaq Capital Market and deregistered under the Exchange Act.
• Zimmer Biomet and a rights agent will enter into the CVR agreement at the effective time of the merger.
• Zimmer Biomet will make efforts to achieve the CVR milestones, which include a proof-of-concept demonstration by early 2026, FDA 510(k) clearance by late 2027, and specific gross revenue targets for 2028, 2029, and 2030.

Key Dates

Recommendation

The Board has unanimously recommended the merger, and a significant portion of stockholders (24.01%) have committed to vote in favor. The offer includes an immediate cash premium over recent trading prices and CVRs for potential future upside, which is attractive given the Company's historical unprofitability and need for capital. However, the CVRs are non-tradeable and contingent on future performance, introducing uncertainty. Ongoing litigation, while deemed meritless by the Company, also presents a risk. For investors who have held Monogram stock, holding through the merger allows participation in the CVRs, which could yield a higher total return than the current market price. For new investors, the current market price of $5.63 (as of Aug 27, 2025) is already above the cash component of $4.04, implying market expectation of CVR value. Given the Board's strong recommendation and the strategic rationale, a 'hold' position is appropriate to capture the potential CVR value while acknowledging the inherent risks and non-guaranteed nature of the contingent payments.

Keywords

Merger, Acquisition, Robotics, Orthopedic Surgery, AI-driven, Medical Technology, SEC Filing, Proxy Statement, Contingent Value Rights, CVR, Zimmer Biomet, Monogram Technologies, MGRM, ZBH, FDA Clearance, Shareholder Vote