An Italian state attorney in Milan moved to block the pending, $2.7 billion merger between Sorin Group (BIT:SRN) and Cyberonics (NSDQ:CYBX), seeking to prevent Sorin from dodging a $3.76 billion environmental lawsuit filed against its former corporate parent.
Sorin and Cyberonics, which announced the merger in February, plan to re-brand the combined company as LivaNova and re-incorporate in the U.K. Sorin’s shareholder’s OK’ed the deal in May, a month after it won approval from U.S. anti-trust regulators.
Today Sorin said it plans to “vigorously contest” the move by the state’s attorney of Milan to enjoin the deal. The Italian prosecutor alleges that the merger with Cyberonics “is intended to insulate Sorin from potential liability related to pending environmental litigation” against Sorin’s former owner, SNIA SpA, which spun Sorin out in 2004. Italy’s environmental ministry is seeking €3.4 billion in damages and remediation costs for allegedly contaminated SNIA sites, according to La Repubblica.
“Sorin and Cyberonics believe the Italian state’s attorney fundamentally misunderstands and misconstrues the structure and goals of the transaction, as well as Italian and European laws and regulations governing these types of transactions. Sorin and Cyberonics believe that the allegations by the Italian state’s attorney are without merit, and Sorin intends to contest them in the Civil Court of Milan,” the companies said.
“We will vigorously contest this claim and seek expedited hearings for this purpose. In the meantime, our 2 companies’ integration plans are progressing well and will continue. At this point, the effect of the Italian state’s attorney’s claim on the timing of the closing of the transaction is unclear, however we will continue to progress towards our scheduled closing and keep both external and internal stakeholders informed of developments,” added Sorin CEO André-Michel Ballester.
The Sorin-Cyberonics merger was slated to close by the end of the 3rd quarter.