STERIS plc to acquire Key Surgical for $850 million

STERIS plc announced that the Company 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.  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.  Annual revenue for Key Surgical in calendar 2020 is anticipated to be approximately $170 million, with adjusted EBIT of approximately $50 million.

Walt Rosebrough, President and Chief Executive Officer of STERIS Said: “Key Surgical strengthens, complements and expands STERIS’s product offering and reach around the globe. Their focus on the sterile processing department, operating room and endoscopy fits perfectly with our core Healthcare Customers, The business has demonstrated an ability to grow at rates above industry levels with its product portfolio breadth, a steady stream of new products and a highly effective commercial model.  We welcome the Key Surgical people to the STERIS team, and we look forward to working together to enhance our service to our Customers and the value for our shareholders.”

Under the terms of the agreement, STERIS will purchase the shares of Key Surgical at closing.  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’s adjusted earnings after close and add approximately $40 million to revenue and about $0.10 to adjusted earnings per diluted share in STERIS’s fiscal 2021 fourth quarter.  STERIS expects to realize annualized pre-tax earnings synergies of $10-$15 million by year three following the close. 

Conference Call

STERIS management will host a conference call at 10:00 a.m. ET today.  The conference call can be heard live online at www.steris-ir.com or via phone by dialing 1-833-535-2199 in the United States or 1-412-902-6776 internationally, then asking to join the conference call for STERIS plc.

For those unable to listen to the conference call live, a replay will be available beginning at 12:00 p.m. ET today, either online at www.steris-ir.com or via phone.  To access the replay of the call, please use the access code 10148662 and dial 1-877-344-7529 in the United States or 1-412-317-0088 internationally.

Source: STERIS plc

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