Will create a global leader in infection prevention and sterilisation
US medical technology company Steris Corporation is to acquire UK-based Synergy Health for US$1.9bn in a cash and stock deal.
Steris said it would create a new UK company to undertake the acquisition, joining a growing list of US companies that are trying to cut their tax bills by shifting their corporate domicile from the US.
The company said the transaction would result in total annual pre-tax cost savings of $30m.
The deal values Synergy Health at £19.50 per share, a 39% premium over the share price last Friday (10 October).
The new company is expected to have annual revenue of approximately $2.6bn and 14,000 employees in more than 60 countries.
For medical device manufacturers, Steris's Isomedix and Synergy's Applied Sterilisation Technologies (AST) will create a leading global supplier with a network of 58 facilities covering 18 countries. For hospitals, the combination of Steris's Infection Prevention and Services businesses with Synergy's Hospital Sterilisation Services will strengthen the breadth and depth of the offering, accelerating the development of hospital sterilisation outsourcing worldwide.
The combination of the two companies creates a balanced portfolio of products and services that can be tailored to best serve the evolving needs of our global customers
Walt Rosebrough, President and CEO of Steris, said the combination of the two companies creates 'a balanced portfolio of products and services that can be tailored to best serve the evolving needs of our global customers'.
'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,' he said.
Richard Steeves, CEO of Synergy Health, added: '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 Boards of Directors of both companies have unanimously recommended the transaction.
The US headquarters will remain in Mentor, Ohio, with Rosebrough as CEO of the merged company.
In fiscal 2014, Synergy generated revenue of approximately $604m and adjusted earnings before interest expense, income taxes, depreciation and amortisation (EBITDA) of approximately $161m.
The transaction is subject to customary closing conditions, including approvals by Steris and Synergy shareholders as well as regulatory approvals in the US and UK, and is anticipated to close by 31 March 2015.