Synergy & Mining Lead London Stocks

PUBLISHED: 14 Oct 2014 @ 02:44 | Comments (0) | More info about Lou Gutheil

If it’s been a good day on the LSE, it largely due to a spike of more than 32% in Synergy Health’s share price and a renewed outlook for the major mining stocks. Synergy (LSE:SYR) was the top riser on the LSE today with three of the remaining top 5 being companies from the mining sector.

Anglo American (LSE:AAL), Rio Tinto (LSE:RIO) and Randgold Resources (LSE:RRS) ranked third, fourth and fifth moving toward the 4:00 pm mark. Another facet that made the day even more of a gem was that AAL, RIO and RRS were the three leading rises on the FTSE 100 and the remaining two of the top 5 were Fresnillo (LSE:FRES) and BHP Billiton (LSE:BLT). Those top 5 mining shares increased by 4.87% (AAL), 3.69% (RRS), 3.63% (RIO), 2.94% (FRES) and 2.51% (BLT).

It appears that investors who had sold off mining shares recently have returned to the fold based on reports of a stronger economic outlook from China. In other words, what previously looked like a worrisome investment now looks like a bargain again. That’s investors trying to predict the future so that they can stay ahead of the curve.

Synergy, on the other hand, not a member of the FTSE 100, rose on the announcement that is is being acquired by Steris Corp. (NYSE:STE), a maker of hospital sterilization products based in Mentor, Ohio. The sale price is £1.2 billion ($1.9 billion US), making the offer worth 1,950.00 per share. That is a healthy 39% premium on Friday’s close at 1,400.00. Synergy opened at 1,389.00 this morning. It is currently at 1,840.00, after having reached a high of 1,865.00. Today’s price sets a new 52-week and record high for Synergy.

Steris will establish a new British company, New STERIS, to administer the acquisition, after which it will move its headquarters to the UK, whilst leaving its U.S. headquarters at their current location. New STERIS will become the holding company for Synergy and Steris.

It goes without saying that this deal is based in large part on the tax advantages of relocating Steris’ headquarters in Great Britain. In addition to a 6.3% reduction in its effective tax rate, Steris projects $30 million in cost savings and reductions that should impact earnings by 2016.

Steris’ CEO Walter Rosebrough, will become the CEO of the new company whilst Synergy’s CEO, Richard Stevens, will join the board of directors. Rosebrough said that “Once the transaction is completed, New STERIS will be a stronger global leader in infection prevention and sterilisation, better-positioned to provide comprehensive solutions to medical device companies, pharma companies, and hospitals around the world.”

New STERIS will employ 14,000 people in 60 different countries, generating an expected revenue of $2.6 billion.

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.