Synergy soars on judge’s call
A COURTROOM drama in Ohio sent shares in Synergy Health soaring yesterday as its proposed takeover by American suitor Steris took a giant leap forward.
A federal judge in Cleveland rejected a request by the Federal Trade Commission to block the £1.25bn deal in a rare loss for antitrust enforcers on the other side of the Atlantic. Both Swindon-based Synergy and Ohiobased Steris specialise in sterilisation with Synergy’s products used in hospitals and surgeries across Britain.
Surgical equipment and other medical devices required high-powered procedures to prevent contamination before they can be used – a job outsourced to the likes of Synergy and Steris.
The FTC claimed that the takeover would hurt competition in America, pointing to Synergy’s decision to scrap plans to enter the US market and open US plants that would use X-rays to sterilise medical equipment.
Synergy’s plants, the FTC argued, would have competed with Steris plants that use gamma rays for the sterilisation process.
The companies claimed that Synergy ditched its plans for US expansion because it found few customers interested in signing up. US district judge Dan Polster agreed and said the FTC had not proved that the deal would dampen competition.
‘We are pleased with the court’s decision and we will work to expeditiously close the acquisition of Synergy Health,’ said Walt Rosebrough, president and chief executive of Steris.
Synergy chief executive Dr Richard Steeves, who founded the FTSE 250 company in 1991, said: ‘We are pleased that the court has agreed with our position and we will be working to close the transaction with Steris Corporation as quickly as possible.
‘We believe that this is a strategically sensible deal that is beneficial to our customers, employees and our shareholders, creating new opportunities for growth with our combined strengths.’
Synergy shares jumped 42pc or 664p to 2244p. But the deal is not without controversy. Not only will it see Synergy fall into foreign hands but will see the American company slash its tax bill by shifting its tax base to the UK. So- called ‘tax inversions’ have been heavily criticised – none more so than the thwarted takeover of British drugs giant AstraZeneca by US rival Pfizer, the maker of Viagra. Synergy was the stand-out performer on a good day for the London market.
The FTSE 100 index rose 147.52 points to 6109.01 while the FTSE 250 closed up 285.34 points at 16,799.87.
Lloyds shares nudged 1.67p higher to 75.51p as the Government announced it has sold another 1pc of the bank – taking its holding down to 11.98pc.
More than £20bn of taxpayers’ money was ploughed into Lloyds to save it from collapse during the financial crisis – giving the Government a stake of more than 40pc. Some £15bn has been raised selling shares with the money used to help reduce national debt.
Chancellor George Osborne said: ‘It’s fantastic news that we’ve sold more shares in Lloyds, taking the total recovered to £15bn. I am determined to build on this success, and to continue to return Lloyds to the private sector and reduce our national debt.’
Rival lender Royal Bank of Scotland was also bailed out during the crisis, having been driven to the brink by disgraced former boss Fred ‘the shred’ Goodwin. Its recovery has been far slower than that of Lloyds but analysts at RBC Capital Markets upgraded its rating on the stock yesterday, from ‘underperform’ to ‘sector perform’ and set a target price of 350p.
RBS also benefited from positive comments from analysts at Morgan Stanley, who replaced Barclays with RBS in its preferred names in the sector. RBS shares rose 8.3p to 319p while Barclays was up 8.5p to 254.95p and HSBC gained 15.5p to 503.6p as the prospect of higher interest rates in the United States tempted buyers.
Only five blue-chip companies were in negative territory yesterday – and once again it was the beleaguered mining stocks heading the wrong way.
The fall in the price of gold took its toll on Randgold Resources (down 20p to 3926p) and Fresnillo (down 2.5p to 618.5p) while Antofagasta was down 5.5p at 506p, Glencore fell 1.39p to 97.22p and Anglo American lost 9.9p to 614.7p.
AIM-listed African Potash closed 0.18p higher at 3.02p after it struck a deal with an unnamed Zambian distributer. The company last month struck a deal through Comesa, a free trade union of 20 African countries, to supply 50,000 tons of fertiliser per year.
Irish agricultural group Origin Enterprises was hit after Swiss-Irish food company Aryzta dumped its entire holding of more than 36m shares or 29pc of the company. Origin shares fell 7.75pc or 0.55p to 6.55p.