Synergy Health rockets after Steris Corp. agrees $1.9bn buy-out - UPDATE
Synergy Health shares rocketed after it was announced US-based medical technology group Steris Corp. had agreed to buy the UK company for $1.9bn.
Synergy Health
2,325.00p
13:25 28/10/15
Synergy shareholders will be paid 439p a share in cash and 0.4308 shares in the newly combined group, valuing shares in the FTSE 250 group at £1.2bn, or 1,950p apiece, 39% higher than Friday's closing price.
The move will re-domicile Steris to the UK, cutting its effective tax rate from around 36% in the 2014 full year to around 25% from 1 April.
According to Investec, Synergy shareholders will hold around 30% of the issued share capital of the enlarged Steris.
Cancaccord Genuity said the deal makes "good strategic sense" and believes the price is "attractive for Synergy shareholders".
The news was announced as Synergy released a trading update for the six months to 28 September, during which underlying revenues climbed 7.4% at constant currency, driven by a strong performance from its applied sterilisation technologies (AST) division.
Reported revenue climbed 2.8% from £192.1m to £197.6m, with gains limited by adverse currency translation effects.
The healthcare solutions business reported a 2.1% decline in underlying revenue to £49.3m, while hospital sterilisation services rose 5.8% to £86.1m. AST jumped 17.5% to £71m, thanks to a particularly strong performance in the Americas.
The group's net debt increased from £147.6m at 30 March and around £172m at 28 September, largely due to its acquisition of Bioster Group in May.
Cancaccord Genuity also commented on the trading update, saying the first-half result had come in slightly ahead of its expectations.
"This is primarily due to a particularly strong performance from AST [...] partly due to the Bioster acquisition, but also from a contribution from Marcoule and strong performance from X-ray in the Americas."
Shares in Synergy had risen 29.87% to 1,818.18p by the midday point.