Medtronic closes Covidien deal, crosses the pond
Updated 5:11 p.m. | Posted 6:53 a.m.
Twin Cities-based Medtronic officially became an Irish enterprise on Monday.
Medtronic is buying Ireland-based medical device manufacturer Covidien. The Irish High Court Monday morning approved Medtronic's $43 billion acquisition of Covidien, an Irish-based medical products maker.
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Medtronic closed the deal by day's end.
Medtronic's operational headquarters and CEO will remain in Minnesota, where the company has announced plans to add 1,000 jobs.
In a statement, CEO Omar Ishrak said the 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."
The purchase makes Medtronic an Irish company for tax purposes, allowing it to return foreign earnings to U.S. operations without taking a big tax hit. Medtronic officials said the move will strengthen the company's U.S. operations.
Industry analyst Jeff Windau of Edward Jones concurs.
"They'll be able to spend more and they won't necessarily have some of the tax consequences of trying to bring money back or repatriate money back into the U.S.," he said.
The combined company will have about $27 billion in annual revenue and do business in more than 160 countries. Medtronic executives say the company will rank number 1 or 2 in several key categories, from coronary stents and medical supplies to spine and diabetes products.
"I think they're going to be thought of less as a cardiology company and more as a broad-based diversified health care provider or health care medical products company," said Joanne Wuensch, an analyst with BMO Capital Markets. "Its peers are going to be less and less companies like Boston Scientific and St. Jude and more and more companies like Johnson & Johnson."
Minnesota will be largely unscathed by the deal, said University of Minnesota business professor Myles Shaver.
"The operational headquarters will effectively stay in Minnesota," he said. "I think we will lose bragging rights when we allude to Fortune 500 firms. But in terms of substantive economic changes, I'm not sure much changes."