Zimmer's ($ZMH) planned acquisition of Biomet may have hit a speedbump, as the U.S. Federal Trade Commission (FTC) requested additional information regarding the companies' pending deal.
The FTC's second request extends the antitrust waiting period under federal law by 30 days, or until Zimmer and Biomet have "substantially complied" with regulators' appeals, the companies said in a statement. The deal is expected to close in the first quarter of 2015 but is still subject to FTC scrutiny.
While neither company spelled out what information the FTC was requesting, the extended waiting period could be attributed to Biomet's legal woes in foreign markets. According to the FCPA Blog, the Warsaw, IN-based company was subpoenaed last week by the SEC for possible violations of the terms of an FCPA settlement the company resolved two years ago. Biomet said in a securities filing that the subpoena concerned "certain alleged improprieties" in the company's Brazilian and Mexican operations. The company learned of the violations in October 2013 and disclosed them to the SEC and DOJ in April, the FCPA Blog reports.
The latest request does not bode well for Zimmer and Biomet, which announced their $13.4 billion deal in April. The acquisition would position the combined company to grab a bigger piece of a $45 billion musculoskeletal industry and is expected to double Zimmer's spine and dental units, CEO David Dvorak said during the company's Q1 2014 earnings call. The companies had combined revenues of $7.8 billion in 2013.
Biomet filed for an IPO in March to raise up to $100 million but ended its plans to go public after the acquisition was announced. The company also briefly considered spinning off its dental unit but changed its tailwinds last October by purchasing Colorado spinal startup Lanx for $150 million.
Biomet and Zimmer's pending deal points to a bigger trend within the industry, as devicemakers are looking to consolidate as a way to boost profit and improve their bottom line. Orthopedics giant Stryker ($SYK) was said to be eyeing a merger, as rumors circulated in May that the company was preparing a bid for U.K. rival Smith & Nephew ($SNN). The Kalamazoo, MI-based outfit has already chalked up 5 recent M&A deals, including its $1.7 billion buyout of robot-assisted surgery outfit Mako ($MAKO) and its $764 acquisition of Chinese orthopedics company Trauson Holdings.
- here's the release
- get more from The Wall Street Journal (sub. req.)
- read the FCPA Blog post