Stocks

Cyberonics, Inc. And Sorin SpA Combine In Deal Worth $3.3B

By: Matt Rego

Cyberonics, Inc. announced today that it has inked a merger deal with Sorin worth $3.3 billion.  Cyberonics reported third quarter earnings today and took the opportunity to announce its merger deal.  The company was estimated by analysts to report earnings per share of $0.57, on revenue of $72.09 million.  Cyberonics reported actual earnings per share of $0.59, on revenue of $72.07 million.  While the medical devices company slightly missed on revenue estimates, income from operations showed growth of 12% year over year.  As a result from the earnings release and merger announcement, Cyberonics is currently rallying over 20%.  Sorin is up over 34% on the merger news. The new company is said to be moving its headquarters to London and will have a market cap of around $3 billion in the medical devices industry.

Cyberonics
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New company will face a lower tax bill in London

Despite continued efforts by President Obama to crack down on corporations moving their headquarters to other countries in seek of lower tax bills, the Texas-based Cyberonics and Italy-based Sorin will step up shop in London.  Cyberonics executives quickly noted that the movement to London was for purely driven by “strategic interests rather than tax advantages”.  However, the United Kingdom has a current corporate tax rate of 21%, compared to the US’s 35%, which will certainly help the new corporate entity, which has not yet been named, pay lower tax bill.  Andre-Michel Ballester, the current CEO of Sorin is said to become the CEO of the new merged company.  Current Cyberonics CEO, Dan Moore will take a non-executive chairman position in the new company.

Cyberonics

Cyberonics-Sorin company will have more vast international reach

Cyberonics specializes in medical equipment that treats epilepsy and sleep apnea, while Sorin specializes in medical devices that help treat heart diseases and conditions, two very prevalent health issues around the world.  The new company will now have operations in over 100 countries and employment of 4,500 workers, which vastly improves outlook for new company.

Dan Moore, a non-executive chairman of the new merged company said the new company will have greater international exposure and diversification, allowing for greater earnings potential and growth.  Mr. Moore also made an emphasis that the new entity will continue to focus on shareholder value.

Overall, the second largest US and European corporate deal of 2015 will bring a significant advantage to both companies, as far as growth and earnings potential is concerned.  Both Sorin and Cyberonics have had success in their perspective niches, but the new diversified company will bring greater opportunity to shareholders and to the bottom line of the new company.

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