Steris (NYSE:STE) said today that it and the target of its $2 billion inversion merger, Synergy Health, received 2nd requests for information from the U.S. Federal Trade Commission, potentially pushing the deal’s finish line further out.
Steris and Synergy announced last October their plans to merge in a deal that would see Steris reincorporate as a British company, lowering its effective tax rate from about 31.3% to 25% in a so-called tax inversion.
Today Steris said the FTC request extends the anti-trust waiting period in the U.S. for another 30 days after both parties comply, unless the watchdog bureau ends the waiting period earlier.
"Both companies are cooperating with the FTC staff in the review of the merger," Steris said in a regulatory filing. "Although both Steris and Synergy continue to work toward closing the merger in the 1st quarter of calendar year 2015, as previously anticipated, the 2nd request may extend the transaction timing beyond March 31, 2015."
The allure of smaller tax bills in countries such as Ireland and Britain has prompted at least 10 U.S. companies to attempt so-called "tax inversions" this year. But the strategy has drawn the ire of U.S. politicians and regulators, resulting a clampdown by the U.S. Treasury in September 2014.
Steris offered Synergy shareholders 439 pence per share in cash and 0.4308 shares in the new company for each share held. The companies said the deal valued Synergy at 19.50 pounds per share, a 39% premium to the stock’s previous close the day the deal was announced. Steris stockholders will hold 70% of the combined company, with Synergy shareholders owning the rest.
The new company is expected to have revenue of about $2.6 billion and 14,000 employees in 60 countries. The deal is expected to cut costs by $30 million or more per year and add to earnings in fiscal 2016, the companies said.
Steris chief executive Walt Rosebrough will be the CEO of the new company, which will retain its operational and U.S. headquarters in Mentor, Ohio.