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Steris to spend $1.9B on UK's Synergy Health
TOM MURPHY
AP Business Writer
Published: October 23, 2014
Steris Corp. will spend about $1.9 billion to buy a British sterilization services company, as U.S. businesses continue to seek overseas incorporations despite attempts to make such tax-saving maneuvers less lucrative.
The medical products maker said Monday that the new company created by its combination with Synergy Health PLC will keep operational headquarters in Mentor, Ohio. But it will incorporate in the United Kingdom, where it will have a tax rate of about 25 percent starting in 2016.
Numerous U.S. companies have made such overseas acquisitions, which are known as inversions. These deals can help businesses lower the taxes they pay in the U.S., which has one of the highest corporate tax rates in the industrialized world.
U.S. medical device maker Medtronic said in June it will pay nearly $43 billion to buy Ireland-based competitor Covidien PLC. More recently, Burger King said it would acquire the Canadian coffee-and-doughnut chain Tim Hortons.
These deals have drawn some public backlash, and the Obama administration recently enacted changes to make inversions less attractive. The Treasury Department announced last month new rules that include barring certain techniques that companies use to lower their tax bills and tightening ownership requirements that must be met for inversions to occur.
Steris expects to close its deal by March 31. It will pay about $31.35 in cash and stock for each Synergy share.
Steris makes infection prevention products and services. Its portfolio includes sterilizers, surgical tables, detergents and laboratory testing services. Synergy Health PLC provides sterilization services for medical device makers, hospitals and other customers. The companies expect their combination to yield pre-tax cost savings of at least $30 million after 2016.
Steris said the combined company will generate about $2.6 billion in annual revenue from more than 60 countries.
Shares of Steris rose 12 cents to $56.50 in premarket trading Monday about 2 ½ hours before the market opened. They have climbed 17 percent so far this year.