Synergy shares slump amid concerns Steris deal will be blocked
SHARES in the health outsourcing firm Synergy Healthcare saw sharp losses yesterday as reports circulated that US authorities were going to block its proposed takeover by Steris, a rival American company.
The FTSE 250 company’s shares finished the trading day down 15.8 per cent, to 1,822p, having recovered slightly from the day’s low of 1,720p, a full 20 per cent lower than at the open. The fall in share price amounted to the firm’s biggest one-day drop since October 2008.
The sudden drop came ahead of a US Federal Trade Commission (FTC) hearing scheduled for later in the day. Even though the hearing was not open to the public, a report came out early yesterday, citing rumours that the FTC was preparing to sue to block the acquisition of Stevis, citing anti-trust concerns.
Last year, the New York Stock Exchange-listed Steris, which makes medical devices, offered to purchase Synergy Health, which is headquartered in Swindon, for approximately £1.2bn. Steris said that it would relocate to the UK for tax purposes as part of the deal, in one of the latest examples of an American company seeking to complete a so-called “tax inversion” deal.
Last month, however, Steris postponed a shareholder vote on the proposed deal until later this summer. Synergy also said that it would delay its own vote.
Reports out yesterday cited a note from London-based broker Olivetree Securities as a catalyst for the share-price drop. According to Reuters, the note said: “”The rumour is that the FTC is preparing to sue-to-block the transaction, which is the mechanism US regulators use to stop M&A transactions.”
An Olivetree analyst contacted by City A.M. would not confirm the reports, but said that a note sent yesterday morning included the line: “There are some large positions in Synergy, which could get nervous now. “