Skip to main content

Medtronic to buy rival Covidien for $42.9 billion

  • Author:
  • Updated:
    Original:

Minnesota-based Medtronic has announced it is acquiring one of its main rivals -- Covidien -- for $42.9 billion in cash and stock. The firm announced the deal on its website Sunday evening.

Medtronic CEO Omar Ishrak will lead the combined company from its "operational headquarters" in Minnesota, where 8,000 employees are located. Its legal headquarters, however, will shift to Ireland, where Covidien's is located. Corporate taxes are quite a bit lower in Ireland than they are in the U.S., and that's one of the main reasons for the merger, the Business Journal reports.

It's not clear whether any jobs will be moved from Medtronic's Fridley headquarters to Ireland. Covidien’s U.S. headquarters are in Massachusetts, but it has a significant presence in Minnesota after a recent series of acquisitions, according to the Business Journal. Covidien has about 1,000 employees in Minnesota.

The company also said it would make an additional $10 billion in U.S. investments over the next decade, including money for research and development and acquisitions. The move may be an effort to show the company is not trying to move jobs out of the United States, the New York Times reports.

“The medical technology industry is critical to the U.S. economy, and we will continue to invest and innovate and create well-paying jobs,” Ishrak, said in a statement. “These investments ultimately produce new therapy and treatment options that improve or save lives for millions of people around the world.”

Minnesota Gov. Mark Dayton said in a statement Sunday night that Ishrak assured him the company's operational headquarters would remain in Minnesota, and that no jobs will be lost here due to this transaction. The company's pledge to grow jobs here, Dayton added, is "tremendous news for Minnesota and evidences the company's continued commitment to our state."

The merged company will become one of the largest providers of medical devices in the industry, with revenues of $27 billion and 87,000 employees in more than 150 countries, according to the company statement.

Medtronic specializes in pacemakers and spinal treatments, among other therapies. Covidien, a former unit of Tyco, focuses on surgical equipment like ventilators, sutures and needles, according to the Times.

Medtronic’s current market value is $60.8 billion, while Covidien is valued at $32.5 billion, USA Today reports.

There’s a trend toward companies merging for such tax advantages, called “tax inversions,” according to the Wall Street Journal. Many health care-related companies are trying to cut costs since the health care reform law went into effect earlier this year. The law puts limits on what those companies can charge for their products and services, says USA Today.

Medtronic has more than $20.5 billion in offshore holdings, according to the Business Journal, and moving its headquarters outside the U.S. would make that cash cheaper to access.

The deal, which was the subject of speculation in various news reports Saturday, has reportedly been in the works for some time. It's the largest acquisition ever for Medtronic, according to the Star Tribune. The deal is expected to close in the fourth quarter of 2014 or early in 2015.

Next Up

walz flanagan lorie shaull flickr

Gov. proposes 'Walz Checks' for most Minnesotans

The governor wants to use $700 million of the state's surplus to fund the payments.

Hutch crash booking photo

Walz, Flanagan call on Hennepin Co. sheriff to resign

"I would say that it is time for him to resign," the Lt. Gov. said.

line 3 enbridge portage lake hubbard county mn tony webster flickr

Months after missing deadline, Enbridge says Line 3 aquifer breach is fixed

The company told Bring Me The News it "successfully stopped the flow of groundwater" at the site.

canada bodies found

Baby, teenager among 4 found dead along MN, Canada border

Authorities believe all four froze to death.

unsplash roller rink skates CROP

Former roller rink, tennis courts will become new sports hub

The Wooddale Fun Zone has been closed since spring of 2020.

hibachi daruma

Popular hibachi food truck opens second Twin Cities restaurant

The much-anticipated Daruma opens for takeout Thursday evening.

20211128_Vikings_49ers_REG12_0144 (1)

What changes are coming to the Vikings' offensive line?

Once again, Minnesota has work to do to figure out its interior spots

Kris Ehresmann

One of Minnesota's key COVID-19 leaders is retiring

Kris Ehresmann has given more than 30 years of her life to public health in Minnesota.

summit beach park orono

Plan to develop Orono park on hold after Daytons object

The Dayton family donated the land to the city for the park in the 1970s.

covid nurse doctor hospital wikimedia commons

Child from Twin Cities, school staff member die from COVID

Both deaths were reported by the Minnesota Department of Health Thursday.

snow

3 clippers will deliver snow to Minnesota through Tuesday

Clippers move through Friday night, Saturday night and again Monday.

Screen Shot 2022-01-20 at 10.45.51 AM

Video: Inebriated Sheriff Dave Hutchinson after high-speed crash

Hutchinson was unaware of his location and repeatedly said he wasn't driving.

Related