13th Oct 2014 09:41
LONDON (Alliance News) - Health services company Synergy Health PLC Monday saw its shares surge after it recommended a USD1.9 billion cash and shares takeover offer from US medical technology and hospital services company Steris Corp.
In a statement, Steris said Synergy Health was recommending its GBP19.50 a share takeover offer, which would create a combined business with about USD2.6 million in annual revenue from over 60 countries and about 14,000 employees.
"For medical device manufacturers, STERIS's Isomedix and Synergy's Applied Sterilization Technologies will create a leading global supplier to best serve medical device customers 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 Sterilization Services will strengthen the breadth and depth of the offering, accelerating the development of hospital sterilization outsourcing worldwide," Steris said in a statement.
The combined company will be incorporated in the UK, while its operational and U.S. headquarters will remain in Mentor, Ohio. Walt Rosebrough, current President and chief executive of Steris, will be the CEO of the combined company. Synergy CEO Richard Steeves will be one of three Synergy board members on the board of the combined company.
Separately, Synergy said revenue was up 2.8% on the year in the first of its current financial year, although it booked a GBP8.8 million revenue hit from adverse currency movements.
In a trading update, the company said revenue in the six months to September 28 was GBP197.6 million, up from GBP192.1 million in the equivalent period a year earlier, although underlying revenue, which excludes currency movements, was up 7.4%, thanks to a particularly strong performance by its Applied Sterilisation Technologies business.
On a constant currency basis, underlying revenue was up 17.5% to GBP71.0 million in Applied Sterilisation Technologies, up 5.8% to GBP86.1 million in its Hospital Sterilisation Services business, but down 2.1% to GBP49.3 million in Healthcare Solutions.
It said it won GBP6 million a year of new hospital sterilisation services contracts in the half, and a further GBP2 million a year is at preferred bidder stage. In September, it launched a new initiative in the UK to lower operating costs in the hospital sterilisation business with the use of new innovative software and RFID technology. The initial reception has been positive, generating new leads and opportunities worth more than GBP10 million a year at this early stage, it said.
It added that net debt rose to about GBP172 million on September 28, from GBP147.6 million on March 30, principally as a result of the Bioster Group acquisition which completed in May.
Synergy Health shares were up 30.3% at 1,811.00 pence Monday morning, the best-performing stock on the FTSE 250.
By Steve McGrath; [email protected]; @stevemcgrath1
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
SYR.L