Italy's Sorin Group fended off an objection to its planned merger with Cyberonics ($CYBX) brought by the State's Attorney of Milan. Its stock is up almost 6% on the Milan Stock Exchange, as investors celebrate the news that the planned holding company, LivaNova PLC, is on track to be formed in the U.K. as planned thanks to a favorable court ruling.
"We welcome the court's expeditious review of this matter and we continue to make good progress towards the creation of LivaNova. We will continue to diligently dialogue with the competent Italian authorities on the issues that have been raised," said Sorin CEO André-Michel Ballester in a statement.
Sorin stock tumbled 12% when the Italian State's Attorney alleged the proposed all-stock is meant to protect Sorin from environmental litigation against Sorin's previous parent company, SNIA S.p.A.
With the legal threat out of the way, the companies said Cyberonics shareholders' vote to approve (or disapprove) of the transaction is scheduled for Sept. 22 at its Houston headquarters. The company will benefit from the U.K.'s 20% corporate tax rate (set to fall to 18% by 2020). That's compared to 35% in the U.S.
The neuromodulation specialist reported quarterly net sales of $81 million, up 12.5% year over year, on the back of strong demand for its sixth-generation AspireSR vagus nerve therapy device in the U.S. and internationally. But its net income fell by about $1 million year over year to $12.4 million.
|Perceval SAVR--Courtesy of Sorin|
The latest iteration of the AspireSR provides automatic stimulation to epilepsy patients who experience a seizure, and is also indicated for treatment-resistant depression. Patients on the previous version of the AspireSR had to use a hand-held magnet to manually activate stimulation when they anticipate a seizure.
Cyberonics also launched the CE-marked Vitaria System in Europe, which deploys vagus nerve stimulation to treat heart failure.
Sorin focuses on artificial heart valves implanted via open heart surgery, as well as cardiac rhythm devices like pacemakers and defibrillators. In a prior interview, the company's U.S. medical director touted multiple studies which found that its CE-marked, Perceval sutureless surgical aortic valve replacement (SAVR) is superior to transcatheter aortic valve replacements (TAVR).
The combined company, dubbed LivaNova, will be worth about $2.7 billion and have annual revenues of about $1.3 billion with approximately 4,500 employees in more than 100 countries.