MINNEAPOLIS – Medtronic Inc. announced Sunday an agreement to acquire Ireland-based Covidien Plc for $42.9 billion in cash and stocks in a deal that will also relocate the Minneapolis orthopedic company overseas. Medtronic, which employs about 530 people in its Warsaw division after 45 layoffs announced in May 2013, will have 87,000 employees in 150 countries under the umbrella of the combined company, Medtronic Plc. It also announced plans to commit $10 billion to technology investments in the US over the next decade, including acquisitions, research and development and venture capital investments. The companies have a combined revenue of $27 billion, including $3.7 billion from emerging markets, according to Medtronic’s announcement. The deal progressed quickly since talks began in April between Medtronic Chairman and CEO Omar Ishrak and Covidien President José E. Almeida, according to New York Times coverage. “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,” Ishrak is quoted as saying in the announcement. Medtronic Plc. will have its principal executive offices in Ireland, the location of Covidien’s Dublin headquarters. Ishrak will continue to lead the company, which will also maintain its operational headquarters in Minneapolis. Covidien shareholders will own about 30 percent of the combined company. The New York Times noted in its coverage Sunday that the corporate tax rate is significantly lower in Ireland than the 35 percent in the US, but that Medtronic argues its tax rate will remain roughly the same, at around 18 percent. Healthcare companies are some of the most active in such foreign acquisitions and moves, called inversions, noted the newspaper, quoting Ishrak as saying the deal is not about lowering tax rates but getting access to the cash flow Covidien generates and using it in the US. Medtronic focuses on pacemakers and spinal treatments, and Covidien on surgical equipment from needles to ventilators. The transaction is subject to approval from shareholders of both companies as well as regulators in the US, the European Union, China and other countries. It’s expected to close in the fourth quarter of this year or early 2015.
