Medtronic shares climb as company goes ahead with Covidien merger

Shares of medical device maker Medtronic Inc. surged Tuesday after the Minneapolis-based company said it would go ahead with its planned $49.2 billion merger with Covidien. Medtronic expects the deal to close in early 2015.

 

Investors had worried that U.S. tax code changes reining in the tax benefits of corporate inversions could derail Medtronic's deal with Dublin-based Covidien. In October, pharmaceutical company AbbVie called off a similar $54 billion deal with Britain-based Shire after new regulations took effect.

Medtronic said revenue for the quarter was $4.4 billion

The Medtronic news came as the company on Tuesday reported a second quarter profit of 83 cents per share, or $828 million, beating analyst estimates. Profit was down 8 percent, but the company attributed the decline to a $100 million charitable donation and other expenses tied to the Covidien deal. The company had earned $902 million, or 89 cents per share, in the same period last year.

Medtronic said revenue for the quarter was $4.4 billion, up 5 percent compared to the same period last year, with $2.5 billion from U.S. operations and $1.9 billion in international revenue.

"Our second quarter performance was strong and well balanced across our businesses and geographies," Omar Ishrak, Medtronic chairman and chief executive officer, said in a statement. "Revenue growth was at the upper end of our full-year revenue outlook and within our mid-single digit baseline goal, reflecting the strong execution of our global organization."

[See also: Mammoth global device company arises from Medtronic acquisition.]

 

The Obama administration in September tightened the tax code so U.S. companies shifting their headquarters overseas through international acquisitions -- called inversion deals -- could not avoid paying certain taxes at home.

 

Shares of Medtronic closed Tuesday at $72.27 per share, up more than 4 percent.