Steris to Buy Synergy Health in $1.9 Billion Inversion DealSteris to Buy Synergy Health in $1.9 Billion Inversion Deal

Steris Corp., an infection control products and services company, plans to move its official headquarters from Ohio to the United Kingdom through a $1.9 billion dollar acquisition of Synergy Health.

The planned merger, announced Monday, is but another example of the tax-saving inversion deals that have been causing consternation among progressive U.S. politicians including President Barack Obama, who has said such companies "avoid paying their fair share in taxes here at home."

With Congress gridlocked on passing anti-inversion legislation, the Treasury Department in late September announced that it is cracking down on many of the financial mechanisms. But the largest medtech inversion deal, Fridley, MN-based Medtronic's $43 billion acquisition of Ireland-based Covidien, is moving forward anyway, with Medtronic turning to external financing to complete the deal.

In the case of Steris, the Mentor, Ohio-based company is insisting to media that the Synergy buy is driven by the growth potential, not potential tax savings.

Steris sells capital equipment products including sterilizers and surgical tables; connectivity services; consumable products including detergents and skin care products; and services including equipment installation and maintenance, microbial reduction of medical devices, instrument and scope repair solutions, and laboratory testing. Synergy provides outsourced sterilization services for medical device manufacturers, hospitals, and other industries.

"Together, we create a balanced portfolio of products and services that can be tailored to best serve the evolving needs of our global customers," Steris CEO Walt Rosebrough said in a news release.

The merger is expected to close by March 31, 2015. It is expected to result in total annual pre-tax cost savings of $30 million or more after the savings are phased in.

The new Steris, headquartered in the U.K., will have an effective tax rate of 25%, according to Steris. The corporate tax rate in the United States is 35%--the highest nominal rate in the world.

Chris Newmarker is senior editor of Qmed and MPMN. Follow him on Twitter at @newmarker.

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