Steris plc (STE) announced Tuesday that it has signed a definitive agreement to purchase Key Surgical, a portfolio company of Water Street Healthcare Partners, LLC, through a U.S. subsidiary for $850 million.
Key Surgical's consumable product portfolio is a natural extension for Steris's customers in sterile processing departments, operating rooms and endoscopy.
Steris anticipates that the acquisition will qualify for a tax benefit related to tax deductible goodwill. Adjusting for the present value of the anticipated tax benefit, the purchase price is effectively reduced to approximately $810 million.
Key Surgical, founded in 1988, is a leading global provider of consumable products serving hospitals and surgical facilities.
The transaction will be financed through a combination of debt and cash on hand and is anticipated to close by December 31, 2020 pending customary closing conditions and regulatory approval.
The transaction is expected to be immediately accretive to Steris' adjusted earnings after close and add approximately $40 million to revenue and about $0.10 to adjusted earnings per share in fiscal 2021 fourth quarter. STERIS also expects to realize annualized pre-tax earnings synergies of $10 million to $15 million by year three following the close.
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