The American medical technology company, Steris Corp, has made an offer to acquire the British sterilization services firm, Synergy Health Plc, for $1.9 billion in cash and stock.
If the deal goes through the company would move its headquarters to the UK as a means of reducing its tax burden.
A new UK company would be formed to undertake the acquisition.
Steris’s effective tax rate for fiscal 2014 was 31.3 percent. However, the new company, domiciled in the UK, would have an effective tax rate of only 25 percent, according to a joint statement by the company on Monday.
Steris is offering 439 pence per share to Synergy shareholders and 0.4308 shares in the new company (for every share in Synergy owned). The deal values Synergy at 19.50 pounds per share (a 39% premium to the stocks closing price on Friday).
Steris shareholders will own 70 percent of the new company and Synergy shareholders will hold the remaining 30 percent.
The new company is forecast to have revenue of approximately $2.6 billion, with a total of 14,000 employees worldwide. It is expected to help cut costs by more than $30 million per year.
The deal, if it goes through, is expected to be complete by March 31, 2015, at which point the new company will go public on the New York Stock Exchange.
The current Chief Executive Officer of Steris, Walt Rosebrough, will become the CEO of the new company.
Many American companies have decided to re-incorporate overseas in order to reduce the tax burden on income. The prospect of paying less taxes has resulted in over 10 US based companies attempting to carry out so-called “tax inversions” this year.
However, the US government is beginning to crackdown on American companies moving oversees by making it more difficult for them to carry out corporate inversion.
