Synergy Health makes offer for outstanding SRI stock

Synergy Health, a provider of outsourced sterilisation services, has commenced a tender offer through its wholly-owned subsidiary, SHM Acquisition, for all of the outstanding shares of common stock of SRI.

The shares will be bought for $3.70 each, net to the seller in cash, without interest.

The deal values the US hospital sterilisation services (HSS) firm at $25.1m. Synergy will take on the US firm's debt, which will increase the acquisition price to $38.5m (£24.9m), which will be funded from Synergy's existing debt facilities.

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In 2011 SRI reported revenues of $107.6m (£69.6m), adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $10.8m (£7.0m), a loss before tax of $1.5m (£1.0m) and had gross assets of $64.2m (£41.5m).

For the three months to March 31st 2012, SRI reported revenues of $27.1m (£17.5m) and adjusted EBITDA of $2.6m (£1.7m). Current trading is in line with the same period in the prior year and the company currently has a bid book in excess of $25.0m (£16.2m) per annum.

The Synergy board believes that the anticipated cost synergies and value re-engineering opportunities of $5m (£3.2m) per annum, combined with the implementation of a cost leadership strategy and the application of Synergy's hospital sterilisation services expertise, will enable SRI to achieve significantly improved financial returns across the business. The acquisition is expected to be earnings per share enhancing in the first full financial year and thereafter.

"SRI is an excellent strategic acquisition for the group providing Synergy with immediate access to the newly developing HSS market in the USA. With the combination of our recently purchased business in New York and SRI, we become the largest provider of outsourced hospital sterilisation services business in the US and create the opportunity to accelerate our local and global leadership," said Dr Richard Steeves, Chief Executive of Synergy Health said earlier this month.

The offer is due to expire on July 12th unless extended, and is conditional on the tender of a majority of the outstanding shares of SRI's common stock.

NR