According to a number of independent news sources, Warsaw's Biomet Inc. has retained investment bank Morgan Stanley to help weigh a possible sale of the company.

Local Biomet officials would not comment or confirm any association with Morgan Stanley. The news of Biomet's relationship with Morgan Stanley was first reported by David Faber on CNBC.

Interim Biomet Chief Executive Officer Daniel P. Hann, interviewed by Bloomberg News, declined to comment on the CNBC report. "We do not comment on market rumor or comment on what outside vendors we may be working with," he said, adding that Biomet is "focused on managing the company through this transition."

Speculation about the possible sale of Biomet surfaced shortly after Dane Miller resigned early last week. Sources cited Miller's abrupt resignation, disappointing financial results over the last several quarters and the selection of Hann, an inside lawyer for the firm, as interim CEO.

TheStreet.com said Miller focused more on engineering and less on sales and marketing than competitors. Reuters said analysts speculated a rift at the board level prompted his resignation and Miller was thought to be opposed to the sale of the company. Miller could not be reached for comment.

Sources said legal challenges led Biomet to make a long-term investment in Hann. A recent regulatory filing shows three days before announcing Miller's retirement, Biomet granted Hann 200,000 stock options, up from 25,000 options the previous fiscal year. Hann also assumed control in the midst of a probe of the orthopedics implant industry to determine the relationship between the companies and surgeons who had been improperly rewarded for using their products.

Market analysts are scrambling to speculate over who might be interested in buying Biomet.

Logical suitors at the top of the list include Medtronic, Abbott Labs and Smith & Nephew, which lost the bidding war with Zimmer over the buyout of Centerpulse. Although Smith & Nephew might be the company most frequently mentioned, TheStreet.com said Medtronic might be a particularly strong acquirer when considering legal issues between the two companies over the past two years. The downsides to Smith & Nephew include its location primarily in England and the fact that Biomet and Smith & Nephew actually would be a merger of equals.

Zimmer, Stryker and DePuy (Johnson & Johnson) are not considered contenders due to possible FTC issues without significant divestiture and product and geographic overlap.

Despite all the chatter, Baird analyst Suey Wong cautioned, "Similar take-out speculation has arisen numerous times over the years with BMET to no avail."

Baird said even though investors bid the stock up yesterday on speculation that the likelihood for take-out has increased, "we do not recommend purchase simply to chase a potential deal."

Market analysts, basing assumptions on historical "revenue take-out multiples," estimate a stock value ranging from $34 to $39 per share if the company sold, leading to a value of $8.7 to $10 billion. Estimates based on potential valuation range from $39 to $44 per share.

Tuesday's close of Biomet stock was up 11 percent or $4.15 per share, closing at $38.90, the highest level in about a year. [[In-content Ad]]