U.S. cracks down on companies moving overseas

The U.S. Treasury Department is taking steps aimed at thwarting so-called tax inversion deals, such as the merger between Medtronic and Ireland-based Covidien.

The typical transaction involves a U.S. company buying a firm based in a foreign tax haven and then moving the combined company's legal headquarters there. The Obama administration has branded such transactions as unpatriotic tax dodges and promised to thwart them.

Treasury Secretary Jacob Lew said the agency's actions will reduce the economic benefit of inversions.

The complex new restrictions will apply to pending mergers, including the marriage of Medtronic and Covidien. Medtronic has argued that the transaction will enable it to put billions of dollars in foreign earnings to work in the U.S.

The company said it is assessing the impact of Treasury's actions.

Medtronic may have to pay Covidien a termination fee of up to $850 million if the transaction is not completed.