Medtronic buying Covidien for $42.9B

Confirming earlier reports, Medtronic (MDT) is buying Covidien (COV) in a cash and stock deal valuing Covidien at $93.22 per share based on Medtronic's Friday close of $60.70. The price represents a near-30% premium to Covidien's Friday close.

The transaction will have each share of Covidien converted into the right to receive $35.19 in cash and 0.956 shares of Medtronic.

Medtronic expects the purchase to be accretive to cash earnings in the first fiscal year following the close (late this year, or early next), and significantly accretive thereafter, with $850M of annual pre-tax cost synergies by the end of fiscal 2018.

As noted earlier, the purchase will have Medtronic moving its principal executive offices to Ireland, where corporate tax rates are lower than the U.S.

Previously: Medtronic in talks for $40B+ Covidien deal

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Comments (16)
  • Jack Banser
    , contributor
    Comments (560) | Send Message
    The title claims the deal is for 42.9 MILLION...Somebody should fix that
    15 Jun 2014, 09:46 PM Reply Like
  • easydom
    , contributor
    Comments (94) | Send Message
    MDT holders should note as this is an inversion, capital gains taxes will apply to your MDT holdings when this transaction closes.


    While there is a lower tax rate after the transaction closes, the IRS will extract their due from the shareholders.


    For those that hold both MDT and COV, well, you get to pay on both sides of the deal.
    15 Jun 2014, 10:02 PM Reply Like
  • Transcripts&10-K's
    , contributor
    Comments (1219) | Send Message
    "MDT holders should note as this is an inversion, capital gains taxes will apply to your MDT holdings when this transaction closes."


    Would you mind adding a source to confirm that? Thanks in advance.
    16 Jun 2014, 11:19 AM Reply Like
  • Big Thunder
    , contributor
    Comments (1272) | Send Message
    This is from the press release linked in the news item:


    "Medtronic shareholders will exchange each share of stock they own in Medtronic for one ordinary share of stock in Medtronic plc. The transaction is expected to be taxable, for U.S. federal income tax purposes, to shareholders of both Medtronic and Covidien."
    16 Jun 2014, 11:40 AM Reply Like
  • Transcripts&10-K's
    , contributor
    Comments (1219) | Send Message
    Perfect, thank you Big Thunder
    16 Jun 2014, 12:08 PM Reply Like
  • easydom
    , contributor
    Comments (94) | Send Message


    In addition to Big Thunder's comment, shareholders will see this in the documentation that will be provided to vote on the merger.


    I learned this the hard way when JAZZ made their move back in 2010 if I recall correctly.


    For some, these inversions create a cash flow challenge to cover the tax as there is none forthcoming from the registration change.
    16 Jun 2014, 01:49 PM Reply Like
  • Transcripts&10-K's
    , contributor
    Comments (1219) | Send Message
    Cool - thanks for the heads up
    16 Jun 2014, 01:56 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2865) | Send Message
    When is Congress going to fix the US tax code so that things like this dont happen? Arent they sent to Washington to lead?
    15 Jun 2014, 11:33 PM Reply Like
  • Topcat
    , contributor
    Comments (580) | Send Message
    Most of them have their campaigns funded by big corporations. Until we prohibit such contributions, it will not change. We need publically run elections, with no contributions possible, and go to all TV/internet debates between candidates covering all the issues. With the current SC declaring that corporations are people (the worse court decision ever), only a change to the constitution can effect that. But, momentum is building to amend the constitution, either by majority of states, or constitutional convention, to overturn the decision and save the country.
    15 Jun 2014, 11:55 PM Reply Like
  • FHayek
    , contributor
    Comments (2) | Send Message
    Ok, understood you don't like the Citizen United case, but that helped level the playing field in politics with public employee union dues going going to democrat candidates' campaigns. Who then often/always funnel more taxpayer $ to public employee unions in one way or another.


    Best approach: vote longtime incumbents of both parties out and new blood in. We also need opposing parties balancing each other out. And stop crony capitalism and simplify the tax code and regulations. Regards,
    16 Jun 2014, 10:11 AM Reply Like
  • Michael Phillips
    , contributor
    Comments (757) | Send Message
    "Until we prohibit such contributions, it will not change."


    So until we stifle First Amendment rights we won't get the sort of elections that YOU want? Seems legit.
    16 Jun 2014, 02:22 PM Reply Like
  • pattirose4
    , contributor
    Comments (3) | Send Message
    ok so should I buy MDT or COV and when? anyone?
    16 Jun 2014, 12:27 AM Reply Like
  • Jfrock24
    , contributor
    Comment (1) | Send Message
    Wondering the same patti, been researching this deal since it came out ..
    16 Jun 2014, 01:44 AM Reply Like
  • jstratt
    , contributor
    Comments (4009) | Send Message
    What percentage of US companies should be allowed to leave the United States? Would any other country allow this to happen?
    How bad is it for the US economy and citizens?
    16 Jun 2014, 08:01 AM Reply Like
  • tomlos
    , contributor
    Comments (1299) | Send Message
    You want our government to regulate how many companies can come and go into our country?
    16 Jun 2014, 09:05 AM Reply Like
  • Gary Jakacky
    , contributor
    Comments (2968) | Send Message
    This is massively bullish not only for the medical device companies, which need to get bigger to fight off FDA morons and nuisance lawsuits, but also for the economy as a whole as it puts pressure on Democrats in congress to slash corporate tax rates. Not that I expect the R.I.N.O.s like McCain or Grahamnesty to seize the day.
    16 Jun 2014, 09:57 AM Reply Like
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