Medtronic, the world's biggest medical devices maker by sales, will buy Ireland-based rival Covidien in a $42.9 billion agreement that could increase concerns about the rush of U.S. companies striking deals to cut their tax bills.
The deal, announced late Sunday, involves Medtronic paying $35.19 in cash and 0.956 of an ordinary share of Medtronic to Covidien shareholders - a premium of 29 percent to the Ireland-based company's closing stock price on Friday.
"This acquisition will allow Medtronic to reach more patients, in more ways and in more places," Medtronic Chairman and CEO Omar Ishrak said in a statement:
Minneapolis-based Medtronic will create two new, Irish-listed companies called New Medtronic and New Medtronic Sub through which it will channel the transaction. As well as saving on Medtronic's tax bill, the acquisition is expected to deliver around $850 million of annual pretax savings by the end of 2018.
"To finance the deal, they have some $13 billion to $14 billion in cash trapped overseas. They wanted to free that up to use that," former Medtronic Chairman and CEO Bill George told CNBC on Monday.