Steris to Buy British Sterilization Services Provider Synergy Health

Steris (Mentor, OH, USA) will also shift is headquarters to a new, UK-based company, thus joining a growing list of companies that are trying to cut taxes by shifting their corporate domicile from the United States.

Steris said the combined company, to be called Steris, will be incorporated in the United Kingdom, but that it will maintain operational and United States headquarters in Ohio. In a joint statement, Steris and Synergy Health (Swindon, United Kingdom) have claimed that the combined entity is anticipated to have an effective tax rate of 25% beginning in fiscal 2016, following the tax inversion deal. In comparison, for the fiscal 2014 year Steris had a tax rate of 31.3%.

The wave of recent intercontinental acquisition deals has partly been driven by UK chancellor George Osborne, who has cut corporation tax by a percentage point each year. The rate is set to fall to 20% in 2015, against the US federal rate of 35%. The appeal of smaller tax bills in European countries such as Ireland and Britain has prompted at least 10 US companies in recent times to attempt so-called "tax inversions." But the strategy has raised indignation of politicians and regulators, resulting in a clampdown by the US Treasury in September 2014.

“This transaction is not being driven by tax rates, but rather is fundamentally driven by our focus on creating value for our customers, our people, and our shareholders by further expanding in the US and through accelerated international growth,” said Walt Rosebrough, CEO of Steris. “Once the transaction is completed, New Steris will be a stronger global leader in infection prevention and sterilization, better positioned to provide comprehensive solutions to medical device companies, pharma companies, and hospitals around the world.”

President Obama has called companies that flee the US “corporate deserters” and the US Congress is promoting legislation to close down loopholes that allow firms to leave. Currently, US companies are allowed to change their tax status by buying an overseas company, as long as no more than 80% of shareholders are based in the US Steris has therefore structured the deal to comply with new rules, with Steris owning 70% of the resulting company and current Synergy investors holding 30%.

Related Links:
Steris
Synergy Health