Steris And Synergy Will Contest FTC Decision Opposing Merger

By Jof Enriquez,
Follow me on Twitter @jofenriq

Steris Corporation and Synergy Health plc announced that they will challenge an administrative complaint that opposes the two companies’ merger.  The U.S. Federal Trade Commission (FTC) lodged the complaint in federal court in January, alleging that the proposed transaction violates antitrust laws concerning regional markets for sterilization products.

In October, Ohio-based Steris announced its acquisition of U.K.-based Synergy in a tax inversion deal worth $1.9 billion. Both companies provide sterilization products and equipment for medical device manufacturers and hospitals. The merger will transfer the new company's tax domicile to the U.K. while maintaining its operational headquarters in Mentor, Ohio.

In January, the FTC asked the two companies to provide additional information in support of their proposed merger, and both firms promptly complied. The action delayed the expected closing date to March 31, but both companies expressed confidence that the transaction still would close during the first quarter.

However, on May 29, the Commission voted 5-0 to file an administrative complaint opposing the merger. In a statement, the FTC said its investigation revealed that the proposed transaction would "violate the antitrust laws by significantly reducing future competition in regional markets for sterilization of products using radiation, particularly gamma or x-ray radiation." The FTC also sought a temporary restraining order, and a preliminary injunction in federal court, to maintain the status quo pending an administrative trial.

In response, Steris and Synergy stated recently that they will contest the FTC's formal complaint in court, and that they welcome a full judicial review of the competitive effects of their proposed merger.

"It is unfortunate that we have come to this point with a transaction as strategic and geographically complimentary as ours," said Walt Rosebrough, president and CEO of Steris Corporation, in a press release.  "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."

"We have strong customer support for the transaction and we are confident that the combination of STERIS and Synergy is pro-competitive and that the court will reject the FTC's request for an injunction once the facts of the combination are fully understood," added Richard Steeves, CEO of Synergy, in the release.

The administrative trial is scheduled to begin on October 28, 2015. To provide ample time to contest the FTC's complaint in court, Steris stated in the release that the long-stop date for completion of the merger, as well as the Bridge Credit Agreement, has been extended to December 31, 2015.