logo
Share SHARE
FONT-SIZE Plus   Neg

WSJ: Medtronic In Advanced Talks To Buy Covidien For More Than $40 Bln

Medical device maker Medtronic Inc. (MDT) is in advanced talks to buy smaller rival Covidien plc (COV) in a deal valued at more than $40 billion, the Wall Street Journal reported Saturday, citing people familiar with the matter.

According to the WSJ report, a deal, which could be structured as a so-called tax inversion, could be announced as early as Monday.

The acquisition of Ireland-based Covidien will enable Minneapolis, Minnesota-based Medtronic to be domiciled in Ireland and take advantage of lower corporate tax rates.

In such deals called inversions, acquirers buy companies domiciled in countries with lower corporate tax rates, enabling the acquirers to substantially reduce their own tax rates and also make it easier to access cash held overseas. The tax rate in Ireland is substantially lower than in the U.S.

Medtronic, which makes products ranging from stents and heart defibrillators to insulin pumps, has a market value of about $61 billion. Covidien, a maker of devices used in surgery such as surgical staples, feeding pumps and ventilators, is valued at about $32 billion.

U.S. healthcare companies are increasingly looking at inversions as an option as the U.S. overhauls its healthcare system under the Affordable Care Act. Some of these companies are sitting on huge cash hoards in their overseas subsidiaries and would be heavily taxed if they repatriated these funds to the U.S.

In addition, hospitals in the U.S., to which medical device companies provide products and services, are seeking to reduce costs by consolidating their vendors.

U.S. drugmaker Pfizer Inc. (PFE) recently made an abortive $116.6 billion takeover bid for British drug maker AstraZeneca plc (AZN, AZN.L) through an inversion. Parsippany, New Jersey-based Actavis plc (ACT) relocated to Ireland through an inversion.

However, U.S. lawmakers are now targeting legislation aimed at curbing U.S. companies from doing inversions.

MDT closed Friday's trading at $60.70, down $0.09 or 0.15 percent on a volume of 2.09 million shares. COV closed Friday's trading at $72.02, down $0.02 or 0.03 percent on a volume of 0.83 million shares.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
Tesla Motors Inc. (TSLA) has launched a new referral program for owners and new buyers of its Model S, as the electric car maker aims to boost sales with the latest marketing strategy. Tesla's referral program offers new buyers a discount of $1,000 if they order a new Model S using the referral link... Marriott reported a 25 percent jump in quarterly profit, topping analysts' estimates, as customers flocked to its hotel properties, driving up occupancy and room rates. The hotel chain provided weak earnings outlook for the current quarter, but lifted its expectations for 2015... Social networking giant Facebook, Inc. said Wednesday after the markets closed that its second quarter profit fell 9% from last year, as higher costs and expenses more than offset a 39% increase in revenue. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.
comments powered by Disqus
RELATED NEWS
Trade MDT now with 
Follow RTT