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
Electric car maker Tesla Motors Inc. (TSLA), Wednesday reported a loss for the fourth quarter that was narrower than last year. The company said it expects to start volume production of Model 3 by September. Palo Alto, California-based Tesla reported fourth-quarter loss of $121.3 million or $0.78... Canada based Maple Leaf Foods Inc. Wednesday said it has reached a definitive agreement with Brynwood Partner VI L.P. for the acquisition of Lightlife Foods Inc. The deal would be worth $140 million plus other costs. Light is a brand in U.S. for refrigerated plant based protein foods. A hedge fund is an alternative investment fund that uses pooled funds from accredited individuals or institutional investors and invests these funds in different assets with a goal of generating high returns. Hedge funds are generally accessible only to accredited or qualified investors. They cannot...
comments powered by Disqus
Follow RTT