STERIS Sets Yields on 2033 and 2036 Bonds to Fund Xodus Medical Deal
Key Facts
STERIS priced its bonds with a 5.650% coupon and a 5.687% yield to maturity on the 2033 tranche, while the 2036 tranche carried a 5.875% coupon and a 5.894% yield, according to a pricing disclosure filed with the U.S. Securities and Exchange Commission. The financing is part of the deal to acquire Xodus Medical, which the company announced in October. STERIS plans to use the net proceeds, together with the delayed-draw term loan and available cash, to fund the purchase price, transaction expenses, working capital needs and general corporate purposes. The disclosure says the bond offering is not contingent on completion of the acquisition, though specific redemption provisions apply if the deal falls through.
The purchase agreement provides for cash consideration of $2.1 billion at closing, subject to customary potential adjustments. It may include additional consideration of up to $150 million if Xodus achieves specified performance targets after closing during 2028. When it announced the deal, STERIS expected to finance it primarily through debt, with closing by December 31, 2026. That timeline remains subject to customary closing conditions and regulatory approvals. The company described the deal as expanding its healthcare consumables portfolio, particularly operating room consumables.
The bonds are part of a broader financing mix disclosed by STERIS in its report for the quarter ended September 30, 2026, when it said the deal was expected to be financed with about $2.0 billion in new debt alongside available cash. The delayed-draw term loan agreement also reduced the bridge financing commitment by $500 million, leaving a commitment of $1.5 billion. That amount represents the remaining bridge financing commitment and does not establish the value of the bonds that were priced. The offering is therefore tied to a financing plan combining debt instruments and existing cash to fund the acquisition. The disclosure shows that the financing structure includes multiple arrangements, rather than a single issuance covering the entire purchase price.
The announcement followed STERIS's second-quarter fiscal 2027 results, when revenue rose 9% to $1.6 billion, compared with $1.5 billion in the corresponding period of the prior fiscal year. Organic constant-currency revenue growth was 8% for the quarter. Adjusted net income per diluted share also rose to $2.94 from $2.47 in the second quarter of fiscal 2026. These figures provide a backdrop to the company's operating performance during the period in which it announced plans to finance the acquisition. In light of the deal, STERIS said it would issue updated guidance that includes Xodus's impact after the acquisition closes.
The company raised its fiscal 2027 adjusted earnings per share forecast to a range of $11.35–$11.55, from a previous range of $11.10–$11.30. The update did not include the impact of the Xodus acquisition; STERIS said it would issue revised guidance after closing. This planned operational step adds to the deal's timeline but does not change the requirement to complete the necessary approvals and procedures. STERIS shares closed at $256.94 on November 9, according to EL7 data. The approved disclosure used here does not provide verified figures for the session's trading range.
The offering prospectus provides for a special mandatory redemption if the acquisition is not completed by the specified deadline or if the purchase agreement is terminated. The redemption price is 101% of the principal amount, plus accrued interest, with January 11, 2028 included among the two reference dates for determining the end of the redemption period. These provisions link the bonds' continued existence to the status of the deal under the terms set out in the prospectus. The acquisition itself was expected to close by December 31, 2026, subject to closing conditions and regulatory approvals. After closing, the company plans to update its financial guidance to include the deal's impact.