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The United States Federal Trade Commission (FTC) has requested more information on the proposed USD1.9bn tax inversion deal between medical technology company Steris Corp. and United Kingdom-based Synergy Health. The move could delay the transaction.
The merger was disclosed in October last year, despite the non-legislative measures taken by the Treasury Department in the previous month to deter the inversions that are being used by US multinationals when merging with an overseas counterpart to enable them to move their tax residences abroad and away from the US corporate tax rate.
It was announced that the new entity, New STERIS, will be incorporated and tax resident in the UK, while its operational and US headquarters will remain in Mentor, Ohio, where most of its executive staff will be located.
Steris has said that the effective tax rate of New STERIS will fall from 31.3 percent to about 25 percent. The UK levies a corporate income tax rate of 21 percent, substantially lower than the US headline tax rate of 35 percent, and also offers concessionary treatment for income from patents under its patent box regime.
No details have been given regarding the scope of the FTC's request to both companies for additional information and documentary material, often referred to as a "second request."
Issuance of the second request generally extends the waiting period for an FTC reply until 30 days after both parties have substantially complied with it. Both companies confirmed that they are cooperating with the FTC, but, although they continue to work toward closing the merger in the first quarter of this year, as previously anticipated, the second request may extend the transaction timing beyond March 31, 2015.
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