Medtronic (MDT) in $43B Acquisition of Rival Covidien (COV)

Medical-device maker Medtronic Inc. (MDT) said Sunday it agreed to acquire its chief rival Covidien Plc (COV) in an almost-$43-billion deal, confirming reports out earlier over the weekend.

The cash-and-stock transaction, the largest ever for Medtronic, values the Dublin, Ireland-based Covidien at $93.22 per share, or about $42.9 billion in total, based on Medtronic’s closing stock price of $60.70 per share on Friday.

Covidien closed at $72.02 on June 13.

“We are excited to reach this agreement with Covidien, which further advances our mission to alleviate pain, restore health and extend life for patients around the world,” said in a statement Medtronic CEO Omar Ishrak. “This acquisition will allow Medtronic to reach more patients, in more ways and in more places.”

“This transaction provides our shareholders with immediate value and the opportunity to participate in the significant upside potential of the combined organization”, said José E. Almeida, Chairman, President and CEO of Covidien.

The combined firm, called Medtronic Plc, will be headquartered for tax purposes in Ireland where the chief corporate tax rate is 12.5%. In the U.S., home to Medtronic, the business tax rate can reach up to 35% – among the world’s highest.

The Minneapolis-based company said it will “continue to have its operational headquarters in Minneapolis, where Medtronic currently employs more than 8,000 people”.

Medtronic said both boards had approved the deal, which they see as accretive to earnings in FY2016.

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