Mammoth global device company arises from Medtronic acquisition
Medtronic announces $42.9 billion bid to purchase rival Covidien
Medical device company Medtronic will catapult into the market’s stratosphere with its $42.9 billion bid to purchase rival Covidien.
In the acquisition announcement made Sunday, the two medical device companies said the cash and stock sale of Covidien to Medtronic will result in combined revenue of $27 billion and will be a huge step forward in the global medical device market for Medtronic, based in Minneapolis, Minn.
Per the press release, the combined company will include 87,000 employees in more than 150 countries. The new company will be called Medtronic plc and will be headquartered in Dublin, Ireland, where Covidien has its current headquarters. Operational headquarters will continue to be in Minneapolis. Omar Ishrak, current chairman and chief executive officer, will lead the combined company.
A story published in the Wall Street Journal noted that making Ireland the company’s headquarters is a trend among healthcare companies because of the country’s low tax rate. According to WSJ, Ireland’s main corporate tax rate is 12.5 percent, compared to the United States’ 35 percent.
Acquisitions such as this one are a reflection of the changes in the healthcare market as hospitals and physician practices’ increasingly consolidate under healthcare reform, Harry Glorikian, a Cambridge, Mass.-based healthcare consultant told the Boston Globe. “Everyone needs more muscle now,” he said, adding that companies are finding it harder to make as much money as they did in the past, so they need more scale to offer a broader line of products and services.
The boards of Medtronic and Covidien unanimously approved the transaction, but the deal is still subject to regulatory clearances in the U.S. and in other countries where the companies do business. The transaction is expected to close in the last quarter of this year or early in 2015.
