Medtronic recently completed its $43 billion purchase of Covidien and officially became an Irish company. The transaction closed after the Irish High Court approved the deal, which effectively moved Medtronic's tax base to Ireland. The company will remain operationally headquartered in the United States.
"The culmination of this acquisition marks a significant milestone in our industry, creating a company uniquely positioned to alleviate pain, restore health and extend life for more patients around the world,” said Omar Ishrak, chairman and CEO of Medtronic, in a company statement. “We can now bring together the extensive and innovative capabilities of both Medtronic and Covidien with an underlying objective to solve healthcare's biggest challenge - expanding access and improving clinical outcomes, while lowering costs."
Ishrak had previously touted the merger as strategic, rather than one made solely for tax inversion purposes. Under this type of business maneuver, U.S. companies are able to pay lower corporate taxes by moving overseas. Medtronic's purchase of Covidien is the biggest tax inversion deal to date in the medtech sector.
"This is an exciting day for our employees as we officially join forces to pursue our shared commitment to addressing universal healthcare needs and accelerating Medtronic's three fundamental strategies of therapy innovation, globalization and economic value,” Ishrak added in the statement. “We know that our combined businesses can have a real and meaningful impact on people's lives - helping to treat more people, in more ways and in more places around the world."
Earlier, Medtronic said in a separate statement that the Irish High Court formally sanctioned the deal that allowed Medtronic to merge with Covidien and redomicile in Ireland. The court's approval was the last hurdle standing in the way of completing the merger agreement. Shareholders of both companies unanimously approved the deal earlier this month.
Under the deal, Medtronic will keep its executive offices in Fridley, Minnesota, but the new parent company's legal headquarters will be in Dublin, according to the company statement. The combined company, Medtronic plc, is expected to employ a combined 85,000 workers globally. Medtronic earlier pledged to hire 1,000 new workers in Minnesota and reinvest $10 billion in the U.S. over the next ten years.
After announcing their $43 billion merger in June last year, Medtronic and Covidien had to overcome major hurdles to complete the transaction by its projected completion in the first quarter of 2015.
Newly introduced U.S. tax rules complicated the deal. However, Medtronic tweaked its financing plan to move ahead with the transaction. In particular, it took a $16 billion loan package to partially finance the deal.
Meanwhile, Covidien sold its Stellarex drug-coated balloon technology to Spectranetics to satisfy anti-trust issues. With the move, the deal eventually received regulatory clearances from the U.S. Federal Trade Commission (FTC), the European Commission, and the Canadian Competition Bureau. It was later approved by the Chinese Ministry of Commerce and the South Korean Fair Trade Commission.