Medtronic Strategy Takes Shape After Biggest Inversion Ever

Medtronic, a Minneapolis-based medical device maker, cited its untapped overseas cash when it announced plans in June to change its legal address to Ireland through a merger with Covidien. Photographer: Ariana Lindquist/Bloomberg

Medtronic, a Minneapolis-based medical device maker, cited its untapped overseas cash when it announced plans in June to change its legal address to Ireland through a merger with Covidien.
Photographer: Ariana Lindquist/Bloomberg

By Michelle Fay Cortez

After pulling off the largest ever “inversion” deal structured to reduce U.S. income taxes, Medtronic Pic (MDT) is plotting another audacious move: the transformation of health-care delivery.

The $42 billion purchase of Covidien Plc (COV) will close as soon as Monday. The transaction cuts taxes by moving Medtronic’s titular headquarters to Ireland. The deal also gives the medical-device maker a wider array of products, enabling the company to work more comprehensively with hospitals to control costs and make care more accessible, Chief Integration Officer Geoff Martha said.

Medtronic went through with the deal despite resistance from the U.S. government. The Treasury Department proposed changes last year to make transactions less profitable for U.S. companies that shift their legal addresses overseas to avoid paying taxes on foreign earnings. Medtronic, which will be run from Minneapolis and domiciled in Ireland for tax purposes, borrowed $16 billion to finance the deal after the rule change meant it couldn’t use cash held abroad without paying taxes.

While the Treasury changes derailed several acquisitions, including AbbVie Inc. (ABBV)’s proposed merger with Shire Plc (SHP), the financial benefits weren’t the driving force for Medtronic, Martha said in an interview.

Read more at Bloomberg

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Categories: Business, Health Care, Ireland, US News, World news

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5 replies

  1. They have $42 Billion to spend but they don’t have the money to pay US taxes. Interesting.

    Liked by 2 people

  2. Personally, I consider this bad news because I have an implanted medtronic devise. Their equipment is expensive and most needs replaced after 7 to 10 years. It does not make patients feel safer that this corporation is setting up a tax shelter especially when they don’t need the money.

    Liked by 1 person

    • For financial knowledgeable patients, it is bad news. It has to be replaced every 7 to 10 years? That doesn’t sound like you are getting your money’s worth for a product.

      They ‘borrowed’ $16 billion to seal the deal or to pay down debt because they had some bad debt hanging in a corner.

      It may be bad news for them in the long run if someone else designs and markets medical devices that can substitute for theirs.

      Liked by 1 person

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