2014 Change YTD: +35%
Market Cap: $4 billion
Major holders as of Sept. 30, 2014: FMR (8.5%), RidgeWorth Capital Management (6.02%), Vanguard Group (5.91%), BlackRock Fund Advisors (4.59%), Franklin Resources (3.82%)
Why is it up? About half of the overall gain in Steris' ($STE) share price occurred following the company's October announcement that it will acquire the U.K.'s Synergy Health for $1.9 billion and undergo a tax inversion, a tax-saving tactic that will become synonymous with 2014 and its bout of med tech merger mania. The acquisition is expected to lower the infection prevention and sterilization products and services company's fiscal tax rate to 25% in fiscal 2016 from the current 35%.
In addition to the tax savings, the transaction is expected to result in total annual pretax savings of at least $30 million, with half of that in 2016 and all of it in subsequent years.
Steris' shares also spiked on a positive fiscal-year Q4 earnings report in May. Revenue rose 9% year over year during the quarter.
What comes next? The looming acquisition of Synergy will expose Steris to global markets. It currently makes about three-fourths of its $1.9 billion in revenue from the U.S.
On the other hand, Synergy had $605 million in fiscal 2014 revenues, with almost 6,000 employees at 135 sites around the world. For the past 5 years, Synergy has been focused on strengthening its position in Europe and developing opportunities in Asia and the Americas. It provides sterilization services to one out of five hospitals in the U.K., with three-quarters of its revenues being ex-U.S.
The companies aim to complete the deal by March 31, but they just announced that the deal could be delayed because of a second request for information from the Federal Trade Commission, a U.S. antitrust authority. The transaction is politically sensitive since it was among the first tax inversion deals announced after the Treasury Department's issuance of new rules designed to make inversions less attractive.
Steris to buy Synergy for $1.9B in another med tech tax inversion deal
In Ohio, Steris slashes jobs and plans to close a plant
-- Varun Saxena (email | Twitter)