Breaking News
FONT-SIZE Plus   Neg
Share SHARE

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

RELATED NEWS
Trade MDT now with 

Medical device maker Medtronic Inc. (MDT: Quote) is in advanced talks to buy smaller rival Covidien plc (COV: Quote) 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.

Register
To receive FREE breaking news email alerts for Medtronic Inc. and others in your portfolio

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
Kraton Performance Polymers, Inc. (KRA), Wednesday reported second-quarter net income of $11.1 million or $0.33 per share, up from $3.8 million or $0.12 per share last year. Adjusted earnings improved to $0.46 per share from $0.15 per share last year. Revenues for the quarter dropped to $323.8... Organic grocer Whole Foods Market, Inc. said Wednesday after the markets closed that its third quarter profit rose 6.3% from last year, as same-store sales increased 3.9%. The company's quarterly earnings per share also came in above analysts' expectations, but its quarterly sales fell shy of analyst' forecast. Micro-blogging site Twitter Inc said Tuesday after the markets closed that its second quarter loss widened from last year, hurt mainly by stock-based compensation expense, even as revenue more than doubled thanks to growth in advertising. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations as did its quarterly revenue.
comments powered by Disqus
FREE Newsletters, Analysis & Alerts

 

Stay informed with our FREE daily Newsletters and real-time breaking News Alerts. Sign up to receive the latest information on business news, health, technology, biotech, market analysis, currency trading and more.