Medtronic buys Covidien
Medtronic is giving tax benefits a go. The Associated Press reports that the device maker is buying Covidien for $42.9 billion. The deal will extend its portfolio and will permit the US company to declare Dublin its home base, the latter meaning Medtronic will soon benefit from a lower tax rate, a situation Pfizer hoped to find itself in when it tried to buy AstraZeneca.
Bloomberg reports the Medtronic deal brings the tally of American companies which have recently reincorporated abroad to 44, and that the push for seeking tax-friendly hometowns is far reaching,and includes shareholders lobbying Walgreen Co. “to get a Swiss address.”
Bloomberg notes that this is not Medtronic's first tax-softening move, and that the company previously shifted around $20.5 billion in earnings to offshore subsidiaries. Reporter Zachary Mider says the deal also stands out because although Dublin is Covidien's official home base, most of its sales and manufacturing sites are in the US.
The AP says Medtronic will keep its Minneapolis, Minn., operation running.