Zimmer announced plans earlier this year to quietly acquire Biomet for $10.35 billion in cash and $3 billion in common stock. However, previous issues could derail the transaction, at least for a time.
The Department of Justice and Securities and Exchange Commission are "conducting a probe" into bribe allegations against Biomet, alleging the company paid providers in Brazil and Mexican customs officials, according to a Med Device Online report. An anonymous whistleblower originally told the company its distributors were paying kickbacks in Brazil in October 2013.
Biomet subsequently fired the implicated employees at the time and reported the misconduct to government officials, and said the company was fully cooperating with investigators earlier this year. Now the company wants to settle the probe to "safeguard the merger with Zimmer." However, things may not go smoothly. Here are five quick updates:
• The probe could result in stiffer penalties than originally thought.
• Biomet may face criminal charges.
• Biomet's participation in federal healthcare programs could be restricted if charges are brought against the company.
• Zimmer may need to restructure the deal and lower the price.
• Biomet informed Zimmer of the investigation during initial merger talks.