Medtronic Flees U.S. Corporate Tax Rate With Covidien Takeover
It looks like Minneapolis-based company Medtronic Inc. (NYSE:MDT) will succeed where Pfizer, Inc. (NYSE:PFE) failed with AstraZeneca plc (NYSE:AZN). The company, which manufactures medical devices sought a takeover of one of its largest competitors, and unlike Pfizer Inc. and AstraZeneca, Covidien plc (NYSE:COV) — which is based in Dublin, Ireland — has taken the bait.
Medtronic will pay $42.9 billion for Covidien, the company announced in a statement Monday. The company is the second largest manufacturer of medical devices after rival Johnson & Johnson (NYSE:JNJ), according to a recent report from Forbes. In particular, Medtronic is known for making implantable heart devices and equipment that is used in spinal surgery procedures. Last year, the company had a net income of $3 billion on sales of $17 billion in its last fiscal year.
Medtronic has the same game plan as Pfizer with the move. The company is re-locating to its Dublin, Ireland, drawn in, in part, by the country’s lower corporate tax rate in an effort to escape the IRS. Though the company will be relocating its tax domicile, Medtronic adds that it will “continue to have its operational headquarters in Minneapolis, where Medtronic currently employs more than 8,000 people,” the company’s statement reads.