Medtronic Acquires Covidien in $42.9 Billion Deal
US medtech company, Medtronic have confirmed the purchase of Ireland’s Covidien for $42.9 billion in cash and stock.
Medtronic is the second-largest maker of medical devices, and once the transaction has been completed, the company noted that will have “significantly advanced” their position as a global “premier medical technology and services company.”
The combined group, which will be named Medtronic Plc, will obtain annual revenues of $27 billion, including $3.7 billion from the emerging markets, and comprise of 87,000 employees operating in over 150 countries.
As a result of the acquisition with Covidien, Medtronic said that they will be able to provide “a broader array of complementary therapies and solutions that can be packaged to drive more value and efficiency.” aided by the two organisation’s “deep relationships with healthcare system stakeholders [which] will provide enormous ability to identify and create further value-based solutions.”
One attraction of Covidien for Medtronic is the favourable tax rates in Ireland. In an aim to reduce criticism in the US, Medtronic notes that “as a direct benefit of the company’s new financial structure, it will commit to $10 billion in technology investments over the next 10 years in areas such as early stage venture capital investments, acquisitions and R&D in the USA.”
Medtronic’s chief executive, Omar Ishrak, commented that the medical technology industry “is critical to the US economy,” and added that Medtronic “will continue to invest and innovate and create well-paying jobs.” Ishrak also confirmed that Medtronic will keep their operational headquarters in Minneapolis.
The purchase is expected to be accretive to earnings in 2016 and is anticipated to result in a minimum of $850 million of annual pre-tax cost synergies by the end of 2018.