The Federal Trade Commission on Friday sued to block the $1.9
billion merger of infection-prevention firm Steris Corp. and U.K.
peer Synergy Health PLC, with the companies pledging to fight back
in court.
Steris agreed to buy Synergy in October in a combination that
mirrors larger inversion deals, in which U.S. firms relocate to
lower-tax jurisdictions. Originally slated for completion by March
31, the deal has been on hold since January, when the FTC asked the
companies for extra information.
The FTC alleged the deal would violate antitrust law by
significantly reducing future competition for the sterilization of
medical devices and other products using radiation. The FTC said
Synergy was planning X-ray-sterilization facilities in the U.S.
that would in the future compete with gamma-sterilization services
offered by Steris. It is unlikely that other companies would
replicate that competition, the FTC said.
The FTC said it is asking a federal court in Ohio to issue a
preliminary injunction blocking the deal while it holds an in-house
administrative trial on the merger in late October.
A public copy of the FTC's legal complaint wasn't immediately
available because confidential information was still being redacted
from it.
"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," Walt Rosebrough, president and chief executive of Steris
Corp, said in a statement.
The companies said they would extend the deadline for the deal
to Dec. 31, buying time to contest the decision. Steris also plans
to extend a bridging loan. Synergy has twice postponed a
shareholder vote to approve the deal.
Richard Steeves, CEO of Swindon-based Synergy Health, said the
FTC has been paying close attention to a Synergy unit that provides
outsourced sterilization services to manufacturers.
"They've asked for a lot of information on Applied Sterilization
Technologies," he said. "That's where they've been focusing their
attention."
He described the division as a "tiny" part of Synergy Health's
business, with a market share of between 1.8% and 4% in the U.S.,
depending on how the FTC decides to categorize its sales.
The unit may be a sticking-point for the FTC because it is
"probably" the third-largest company in its corner of the
health-care market, while Steris itself is one of the top two, said
Julie Simmonds, an analyst at Canaccord Genuity Ltd.
Write to Ed Ballard at ed.ballard@wsj.com and Brent Kendall at
brent.kendall@wsj.com
Access Investor Kit for Synergy Health Plc
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=GB0030757263
Access Investor Kit for STERIS Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US8591521005
Subscribe to WSJ: http://online.wsj.com?mod=djnwires