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Medtronic-Covidien Deal Is Done

Medtronic as of Monday expected to complete its $48 billion merger with Covidien—after clearing its final hurdle with the Irish High Court’s sanctioning of the deal.

Bloomberg dubbed the merger the biggest inversion ever, while noting that the merger could make the firm savvier in negotiating deals with U.S. hospitals. The publication quoted analyst Joanne Wuensch of BMO Capital Markets (New York City) as saying: “[The deal] does facilitate the partnership between the device manufacturers and the hospital providers, being able to make more purchases from a fewer number of sellers.”

The new entity, which will be known as Medtronic plc, could be traded on the New York Stock Exchange as soon as January 27.

The approval of the Irish court was necessary because Covidien was legally headquartered in Dublin, and the merger would relocate the new firm’s legal headquarters to the Emerald Isle. The news completes a seventh-journey for Medtronic, which is moving its official headquarters from Minnesota to Ireland as it creates a new Medtronic that will rival Johnson & Johnson as the largest medical device company in the world. The new company will have $27 billion in revenue and more than 85,000 employees.

Progressive politicians in the United States criticized and threw up roadblocks against the deal amid complaints that it would allow Medtronic to avoid paying corporate taxes on overseas profits. But Medtronic and Covidien officials maintained all along that the merger was highly strategic.

“This proposed acquisition was conceived and undertaken for strategic reasons and is intended to create a company that can treat more patients, in more ways and in more places around the world,” Omar Ishrak, chairman and CEO of Medtronic, said at one point. “We believe our combination will be uniquely positioned to help advance the goals of the Affordable Care Act in the U.S. as well as the objectives of virtually all health systems—to drive access to high-quality, affordable healthcare for patients around the world.”

Meanwhile, the United States in general and the state of Minnesota in particular could see some benefits from the deal, as Medtronic announced plans to add 1000 jobs while investing $10 billion in the United States over the next decade.

 

Source: qmed.com

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