Medical-device maker Medtronic Inc. (MDT) is in advanced talks to merge with its chief rival Covidien Plc (COV) for more than $45 billion, according to a report Saturday in Reuters.
The deal, which could be announced Monday, would be structured as a “tax inversion”. In such deals acquirers effectively reduce corporate taxes by buying companies domiciled in countries with lower corporate tax rates. Covidien is based in Dublin, Ireland, where the chief corporate tax rate is 12.5%. In the US, home to Medtronic, the 35% rate is one of the world’s highest.
There have been more than a dozen inversions since January 2012, according to data compiled by Bloomberg.
Minneapolis-based Medtronic is the world’s largest stand-alone medical device maker. It has a market cap of about $61 billion, compared with about $33 billion for Covidien, which makes devices used in surgery.
Shares of both companies, which have risen more than 5.7% this year, closed slightly lower Friday.
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