Monday, June 16, 2014

Global Impact: Medtronic Acquires Ireland's Covidien to Create World's 2nd Largest Medical Device Firm, Relocates to Ireland for Tax Purposes

According to The Latin American Tribune, Medtronic, Inc. announced a $42.9 billion deal to acquire Ireland’s Covidien and create the world’s second-largest manufacturer of medical devices.

The new firm, known as Medtronic PLC, will “have its principal executive offices” in Dublin for tax reasons, the former US company said, adding that it plans to retain its operational headquarters - with its 8,000 jobs - in Minneapolis.

The cash and stock transaction values Covidien at $93.22 per share, well above last Friday’s closing price of $72.02 a share.

COMMENT: Analysts see the acquisition as another step toward consolidation in the medical-device sector, similar to what has been going on in the pharmaceuticals industry, as companies seek economies of scale and greater bargaining power with healthcare providers and administrators.

Medtronic PLC will be second only to Johnson & Johnson as a producer of medical devices.
 
Covidien’s shares soared 21.5% on the New York Stock Exchange on Monday (June 16), while Medtronic declined 0.35%.