(Article updated at 1:50 p.m. ET Dec. 29, 2014.)
The U.S. Justice Department and the Securities and Exchanges Commission are investigating the Warsaw, Ind.-based company following an e-mail from an anonymous whistle-blower, the Times reported Tuesday. Lawyers briefed on the matter tell the Times that the investigation may have complicated the company's expected $13.35 billion acquisition by Zimmer Holdings, also based in Warsaw.
The SEC declined to comment on the matter. The Justice Department would neither confirm nor deny that an investigation was underway. Representatives from Biomet and Zimmer have not yet responded to requests for comment.
This isn't the first time the company, which makes musculoskeletal and biotechnology products, has been accused of foreign bribery. In 2012, Biomet paid $23 million to the federal government to settle allegations that it had paid more than $1.5 million in direct and indirect corrupt payments to government-owned healthcare providers in Argentina, Brazil and China.
Sources told the New York Times that Biomet's lawyers have been in discussions with the federal government to settle the latest allegations, and have asked the government to resolve the investigation quickly to safeguard the Zimmer merger. Lawyers briefed on the matter told the Times that the Justice Department has considered a deferred prosecution agreement in which criminal charges would be withheld in exchange for certain concessions.
If such an agreement is reached, the Justice Department would only prosecute the company's Brazilian and Mexican subsidiaries, the Times reported.
Biomet reported in a July SEC filing that it had been subpoenaed by the SEC regarding “certain alleged improprieties” it had discovered in its operations in Brazil and Mexico in October 2013, which the company disclosed to the Justice Department and SEC in April 2014. The company said it had terminated, suspended or otherwise disciplined employees and executives involved.
Repeated accusations of bribery could mean unusually high penalties, the Times noted, which means Zimmer may seek a price cut.
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