SHARES in the health outsourcing firm Synergy Healthcare saw sharp losses yesterday as reports circulated that US authorities were going to block its proposed takeover by Steris, a rival American company.
The FTSE 250 company’s shares finished the trading day down 15.8 per cent, to 1,822p, having recovered slightly from the day’s low of 1,720p, a full 20 per cent lower than at the open. The fall in share price amounted to the firm’s biggest one-day drop since October 2008.
The sudden drop came ahead of a US Federal Trade Commission (FTC) hearing scheduled for later in the day. Even though the hearing was not open to the public, a report came out early yesterday, citing rumours that the FTC was preparing to sue to block the acquisition of Stevis, citing anti-trust concerns.
Last year, the New York Stock Exchange-listed Steris, which makes medical devices, offered to purchase Synergy Health, which is headquartered in Swindon, for approximately £1.2bn. Steris said that it would relocate to the UK for tax purposes as part of the deal, in one of the latest examples of an American company seeking to complete a so-called “tax inversion” deal.
Last month, however, Steris postponed a shareholder vote on the proposed deal until later this summer. Synergy also said that it would delay its own vote.
Reports out yesterday cited a note from London-based broker Olivetree Securities as a catalyst for the share-price drop. According to Reuters, the note said: “"The rumour is that the FTC is preparing to sue-to-block the transaction, which is the mechanism US regulators use to stop M&A transactions.”
An Olivetree analyst contacted by City A.M. would not confirm the reports, but said that a note sent yesterday morning included the line: “There are some large positions in Synergy, which could get nervous now. “