News & Views
Purchase of Covidien Brings Tax Benefits to US Medtronic
Jun 21 2014
Medtronic Inc. a global leader in medical technology, services and solutions has acquired Dublin-based global healthcare technology and medical supplies provider Covidien in a cash-and-stock transaction valued at $93.22 per Covidien share, or a total of approximately $42.9 billion, based on Medtronic’s closing stock price of $60.70 per share on June 13, 2014.
After the completion, the combined new entity Medtronic plc will have its principal executive offices in Ireland, where Covidien’s current headquarters resides and where both companies have a long standing presence. The move allows Medtronic to benefit from the lower corporate tax rate in Ireland set at 12.5% compared to business rates reaching higher than 30% in the US.
The merger is expected to result in annual cost-savings of at least $850m by the end of the firm's financial year in 2018, the company said.
“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 Omar Ishrak, Chairman and Chief Executive Officer of Medtronic.
“This acquisition will allow Medtronic to reach more patients, in more ways and in more places. Our expertise and portfolio of services will allow us to serve our customers more efficiently and better address the demands of the current healthcare marketplace.”
“This transaction provides our shareholders with immediate value and the opportunity to participate in the significant upside potential of the combined organisation. I’d like to thank our 38,000 employees whose hard work and dedication has enabled Covidien to deliver innovative health solutions that improve patient outcomes,” added José E. Almeida, Chairman, President and Chief Executive of Covidean.
Medtronic plc will be led by Mr. Ishrak, and will continue to have its operational headquarters in Minneapolis, where Medtronic currently employs more than 8,000 people.
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