(Reuters) — Steris (NYSE:STE) and Synergy Health said they would contest the U.S. Federal Trade Commission’s attempt to block Steris’s acquisition of the British company.
The companies said they were confident the court would reject the FTC’s request for an injunction blocking the merger.
“We are very disappointed by the FTC’s decision to impede this transaction and intend to vigorously challenge their claims in court,” Synergy CEO Richard Steeves said in a statement.
Synergy shares fell as much as 6.2% in early trading, making it the top loser on the FTSE-250 Midcap Index this morning.
A number of “inversion” deals – which allow companies to escape higher taxes in the U.S. by reincorporating abroad – have come undone in the past few months after the U.S. Treasury Dept. tightened its rules.
Steris offered to buy Synergy for about $1.9 billion in October, after the new rules were announced, in a deal that would allow the U.S.-based company to shift its domicile to the U.K. and cut its tax bill.
Steris said in a separate statement that the companies had not yet seen the FTC announcement or formal complaint, but welcomed a full judicial review of the competitive effects of the combination.
“We have worked diligently to address the FTC’s concerns and to avoid litigation, but we will now focus our efforts on prevailing in court,” Steris CEO Walt Rosebrough said.
The deal has been hanging in the balance since the FTC began reviewing it in October. The companies said in mid-January that the FTC had requested additional information and documentary material related to the deal, effectively extending the initial deal closing of March 31. In March the companies postponed a shareholder vote on their proposed merger in order to comply with an information request from the FTC. U.K. regulators approved the deal in February.
Synergy and Steris said on Friday that they planned to extend the completion date to Dec. 31.
Synergy shares were down 1.7% at £18.61 at 9:09 GMT. The stock has lost more than 16% in the last 3 days on doubts of the deal going through.
Steris shares have lost 4.3% during the same period. They closed at $66.15 yesterday on the New York Stock Exchange.
