U.S. medical device manufacturer Medtronic announced last night that it has agreed to buy Ireland-based competitor Covidien for $42.9 billion in cash and stock.The combined company would have its executive offices in Dublin, Ireland, where it could benefit from Ireland’s lower corporate tax rates. But the merged company would continue to operate in Minneapolis, where Medtronic employs more than 8,000, the companies said in a statement.In the Chicago area, Walgreen has been under pressure to move its headquarters overseas from north suburban Deerfield.
Medtronic shifts HQ to Ireland for tax purposesTHE world’s second-largest maker of medical devices is moving its headquarters to Ireland for tax purposes.Medtronic Chief Executive Omar IshrakMedtronic will come here after agreeing to buy Dublin-based Covidien for $42.9bn (€31bn) in cash and stock but the move will make little practical difference.Medtronic’s executive team will not have to move to Ireland to consummate the deal. While Covidien is currently based in Dublin for tax purposes, the company is run from its offices in Mansfield, Massachusetts.The gives the Minneapolis-based Medtronic access to Covidien’s portfolio of hospital supplies, from surgical staplers to ventilators, and adds size and scope that may allow it to better compete with Johnson & Johnson, the largest medical device company. At the same time, use of Covidien’s Irish address could free almost $14bn in cash Medtronic now holds overseas as a way to avoid being taxed on it under US laws.The primary motivation is “strategic and operational alignment,” said Medtronic chief executive Omar Ishrak. “It will drive better value for patients and customers around the world.”Covidien shares jumped 30pc yesterday morning in Frankfurt. Medtronic climbed 2.5pc.Medtronic’s tax rate will remain about the same, even after the company redomiciles in Dublin, Mr Ishrak said. The advantage gained in the deal is that Medtronic will be able to better use profits it made outside of the US, which it plans to invest back into the industry, according to Ishrak.
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