Italy-US medical merger to create €2.4bn firm

The Italian manufacturer of pacemakers Sorin on Thursday announced it plans to merge with US medical device firm Cyberonics, creating a new company valued at around €2.4 billion.

Italy-US medical merger to create €2.4bn firm
The new entity will employ around 4,500 people in more than 100 countries. Photo: Sorin Group

The all-stock transaction would lead to the new firm being 46 percent held by Sorin shareholders and 54 percent by those of Cyberonics. The combined turnover would be around €1.3 billion, Sorin said in a statement.

The proposed merger has been unanimously approved by the board of directors of the two companies. The new entity – to be named prior to closing of the transaction – will employ around 4,500 people in more than 100 countries.

It will focus on three areas: cardiac surgery, cardiac rhythm management (pacemakers, defibrillators, etc.), especially in Europe and Japan, and neuromodulation, a speciality of Cyberonics which develops technologies for the electrical stimulation of nerves used in treating epilepsy and some forms of depression.

"As one company we will be able to leverage our combined strengths, capture new opportunities and create new solutions to benefit patients and healthcare professionals alike," said Sorin chief executive Andre-Michel Ballester, who will serve as chief executive of the merged company with Cyberonics chief Dan Moore as non-executive chairman.

Based in Britain, the new company will be listed in London and on the Nasdaq. The transaction, pending approvals by the shareholders of both companies and regulators, is expected to be completed in the third quarter of this year.

After the announcement of the merger, shares of Sorin soared 19.49 percent to €2.62 in early trading on the Milan stock market.

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Renault shares plunge as Fiat merger talks fail

Renault shares plunged on Thursday after Italian-American carmaker Fiat Chrysler said it had withdrawn a proposal for a merger, saying it would be unable to reach an agreement with the French government.

Renault shares plunge as Fiat merger talks fail
A merger between Fiat Chrysler and Renault would have created the world's biggest carmaker. Photo: Marco Bertorello/AFP

Fiat Chrysler (FCA) “remains firmly convinced” of the interest of its offer but “political conditions do not currently exist in France to carry out such an arrangement”, it said in a statement.

French automaker Renault announced earlier that its board of directors had not reached a decision following a crunch meeting held at the request of the French state, the biggest shareholder in Renault with a 15 percent stake.

Fiat Chrysler proposed a “merger of equals” with Renault last week which was welcomed by financial markets and had been given a conditional green light by the French government, although it warned against “any haste” regarding the proposed 50/50 merger.

READ ALSO: Fiat Chrysler proposes merger with Renault

Photo: Loic Venance, Marco Bertorllo/AFP

French Finance Minister Bruno Le Maire had said a merger, which would have brought together the flagship brands as well as Alfa Romeo, Jeep, Maserati, Dacia and Lada, would be “a real opportunity for the French auto industry”. However, he had set various conditions, including that no plants be closed as part of the tie-up and that the Renault-Nissan alliance continues. 

A source close to Renault said Le Maire had asked for a board meeting next Tuesday after he returns from a trip to Japan where he will discuss the proposal with his Japanese counterpart.

At Wednesday evening's board of directors vote at Renault's headquarters near Paris, all the directors were for the merger, apart from a representative of employees affiliated with the powerful CGT union and two representatives of Nissan — a long-time Renault partner — who abstained, the source added.

The two directors appointed by Nissan, however, asked “to write in the minutes that they would say yes with a little more time”.

Fiat Chrysler said: “FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been widely appreciated since it was submitted, the structure and terms of which were carefully balanced to deliver substantial benefits to all parties.

“However, it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”

Renault holds a 43-percent stake in Nissan, whose stocks tumbled 2.64 percent to 742.7 yen on Thursday after the withdrawal was announced. Relations in the partnership have been under strain since the arrest last November of former boss Carlos Ghosn, who is awaiting trial in Japan over charges of under-reporting his salary for years while at Nissan and using company funds for personal expenses.

The merger would have created a group worth more than €30 billion, producing 8.7 million vehicles per year. The combined mega-group — including Nissan and Mitsubishi — would be by far the world's biggest, selling some 15 million vehicles, surpassing Volkswagen and Toyota, which sell around 10.6 million each.

Foreign takeovers of major French firms are highly controversial and successive governments have sought to defend domestic industrial groups which are seen as important for their technology or jobs.