Will The Medtronic-Covidien Merger Create U.S. Jobs?
By Jof Enriquez,
Follow me on Twitter @jofenriq
Medtronic Inc. chairman and CEO Omar Ishrak recently defended his company’s contentious decision to merge with Irish medical device maker Covidien by saying that the deal will create more jobs for Americans in the long run.
Speaking recently to analysts and reporters during a conference call to discuss Medtronic’s quarterly earnings, Ishrak said that Medtronic will invest “much more aggressively” in the U.S. after the deal — creating more jobs in the U.S. medtech sector in the process, according to the Boston Business Journal.
Medtronic announced its $42.9 billion merger with Covidien in June, wherein Medtronic will relocate its tax base to Ireland while maintaining its headquarters on U.S. soil. The corporate inversion agreement has drawn backlash from both the American public and U.S. government officials, who see a big U.S. company simply dodging taxes rather than making a strategic play in a competitive market.
In remarks made during the conference call, Ishrak maintained the position that the deal was done for the good of all stakeholders involved.
“Acquiring Covidien is good for Medtronic, for our shareholders, for patients, for the medtech industry and ultimately good for the U.S. economy,” Ishrak told analysts in the meeting, according to a Reuters report.
During the call, the company touted its highest revenue growth performance in five years, and said its current strategies for future growth would be further boosted by buying Covidien.
“We believe we can accelerate these strategies with the Covidien acquisition, which we are fully committed to completing in the calendar fourth quarter of 2014 or early 2015,” Ishrak said, according to the Wall Street Journal.
According to Reuters, Ishrak downplayed the impact of the inversion deal on Medtronic’s tax liabilities, saying that the medical device company’s “effective tax rate on global income will fall to about 16-17 percent after the deal from 18-19 percent now.”
The company reiterated its full commitment to get the Covidien deal done despite potential executive and legislative action that could stymie the deal. Regardless, Ishrak seems unperturbed about what he described as “noise” surrounding the deal.
“We’re certainly standing by the strategic benefits the deal has to offer,” Ishrak said in an interview with the Star Tribune. “The structure that we chose is the most optimum structure based on the laws of today. If the laws change, it’s tough to say [how that could affect the deal]. We are not spending any time at all speculating as to what those changes could be.”