Steris to buy UK’s Synergy Health for $1.9 billion
pharmafile | October 13, 2014 | News story | Manufacturing and Production, Sales and Marketing | health, manufacturing, steris, synergy, tax
US-based medical technology firm Steris Corporation is to purchase Synergy Health in the UK for $1.9 billion and will shift its domicile here to cut its tax bill.
British sterilisation services provider Synergy Health would receive the amount in cash and stock, and Steris said it would then set up a new UK company to undertake the acquisition – joining a growing list of US firms trying to reduce their tax costs by shifting their corporate home from there to the UK.
Walt Rosebrough, president and chief executive of Steris says: “Once the transaction is completed, new Steris will be a stronger global leader in infection prevention and sterilisation, better-positioned to provide comprehensive solutions to medical device companies, pharma companies, and hospitals around the world.”
Part of the lure to Synergy’s purchase would have been that during fiscal 2014 it generated revenue of approximately $443 million, and the new company is expected to have an effective tax rate of around 25% beginning in the fiscal year, the companies say in a joint statement.
Steris’s planned move to the UK comes less than a month after US Treasury Secretary Jack Lew stiffened the rules on so-called tax inversions. Further restrictions require action by US Congress, and apparently Democrats and Republicans have been unable to agree on legislation.
An analyst at Numis Securities in London, Charles Weston, tells Bloomberg: “There’s a lot of political noise around tax inversions, but this is primarily a US company acquiring a company in the same space with a very good international presence,” and he adds: “The deal makes sense even in the absence of tax advantages.”
The new firm is expected to have revenue of about $2.6 billion and 14,000 employees in 60 countries. The deal is set to cut costs by $30 million or more per year and add to earnings in fiscal 2016, the companies say.
Dr Richard Steeves, chief executive of Synergy Health adds: “The combined entity brings together the strengths of both businesses, allowing new Steris to accomplish much more than either one of us could separately.”
The acquisition is expected to be completed by the end of March next year, after which the new company’s shares are then to be listed on the New York Stock Exchange.
Brett Wells
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