Acquisition of US Sterilisation Company

Thursday 7 April 2011

SYNERGY HEALTH PLC

("Synergy" or the "Company")

Acquisition of US Sterilisation Company

Provides entry into US market

Supports growth of sterilisation business in China

Synergy Health plc (LSE: SYR), a leading provider of specialist outsourced support services to health related markets in the UK and Ireland, Europe and the Middle East, Asia and Africa, announces the acquisition of BeamOne LLC ("BeamOne") for an initial cash consideration of US$35 million (£21.5 million) together with a deferred cash consideration of up to a maximum of US$20 million (£12.3 million) depending on performance for the year ending 1 April 2012 representing a prospective PE of 14.

BeamOne is the largest provider of outsourced, e-beam medical device sterilisation services in the US, and the third largest by revenue. BeamOne has FDA approved sites in San Diego, California; Denver, Colorado; Lima, Ohio; Saxonburg, Pennsylvania; and a fifth site in Costa Rica.

In the year ended 31 December 2010, BeamOne recorded revenues of US$14.3 million (£8.8 million), a profit before tax of US$2.7 million (£1.7 million) and had gross assets of $14.9 million (£9.1 million). The business is expected to grow strongly having recently opened the new facility in Saxonburg and is doubling its ebeam operations in Costa Rica with new capacity coming on stream in 2012.

Strategic Rationale

The acquisition of BeamOne is Synergy's first expansion into the US sterilisation market, estimated to be worth US$600 million per annum. As well as acquiring a well established and growing business in a key market, BeamOne's respected relationships with US-based, global medical device manufacturers, should enable Synergy to deepen further its relationships and capture greater sterilisation business for its operations in Asia, and in particular China. Furthermore, the acquisition will provide a platform from which Synergy can start to research and develop the provision of its world-class central sterilisation services ("decontamination") to American hospitals and healthcare providers. Synergy has a proven track record of providing outsourced decontamination services more efficiently and to a higher quality standard than in-house providers, and with a tightening regulatory environment as well as increasing focus on reducing post-operative infections, it is believed that the outsourcing market will increasingly develop.

This acquisition follows the acquisition in December 2010 of Gamma-Service Prodktbestrahlung GmBH, a German provider of gamma and e-beam sterilisation services to the healthcare and industrial sectors, which enabled Synergy to add electron beam processing to the service offering in mainland Europe and provided entry to other markets in Eastern Europe.

These acquisitions are in line with Synergy's strategy of broadening its range of services in current markets and expanding its geographic footprint into new markets.

Management

BeamOne's current executive and management groups will remain in place. Glenn Thibault, formerly President and CEO of BeamOne, will be the CEO of Synergy's new Americas Region and Glenn will join the Senior Executive Board. The senior management team has a wealth of experience that will enable this new region to make a significant contribution to Synergy's growth.

Trading Update

Trading in the fourth quarter has remained consistent with the trends established earlier in the year and we expect to report full year results in line with market consensus on 7 June 2011.

Richard Steeves, Chief Executive of Synergy Health plc, said:

"This is a significant step for Synergy, providing us with an entry into one of the world's largest and most established sterilisation markets. BeamOne is the leading e-beam sterilisation provider in the US and by joining our network, we will create the second largest, global outsourced sterilisation business in the world.

"BeamOne is a cultural and technological match to our own corporate philosophy. The blending of these two highly capable businesses will provide tremendous benefits to the health care and medical device manufacturing industries. The new team will allow us to expand our technologies into the Americas and further enhance our technological capabilities in the electron beam sectors of our other international markets.

"The recent acquisitions reflect Synergy's stated strategy to become a global leader in applied sterilisation services within the healthcare market for medical device manufacturers, hospitals and other healthcare providers."

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