Medtronic buys Covidien

Tuesday, June 17, 2014

MINNEAPOLIS and DUBLIN – Medtronic has agreed to buy Covidien in a cash-and-stock transaction valued at about $42.9 billion, the companies announced June 15.

The combined company will have a comprehensive product portfolio, a diversified growth profile and broad geographic reach, with 87,000 employees in more than 150 countries, according to a press release.

“We are excited to reach this agreement with Covidien, which further advances our mission to alleviate pain, restore health and extend life for patients around the world,” stated Omar Ishrak, chairman and CEO of Medtronic, in the release.

The boards of directors of both companies have approved the transaction.

After the transaction is completed, Medtronic and Covidien will be combined under a new entity called Medtronic plc. It will have principal offices in Ireland, where Covidien’s current headquarters reside and where both companies have a longstanding presence.

Medtronic plc will be led by Ishrak and will continue to have operational headquarters in Minneapolis, where Medtronic currently employs more than 8,000.

Per the transaction, each outstanding share of Covidien will be converted into the right to receive $35.19 in cash and 0.956 of an ordinary share of Medtronic plc. The per-share consideration represents a premium of 29% to Covidien’s closing stock price on June 13, the last trading day prior to the announcement.

The transaction will allow Medtronic to enhance its existing portfolio, offer greater breadth across clinical areas and create entry points into new therapies. It will also allow the company to better package complementary therapies and solutions to drive value and efficiencies in healthcare systems. Finally, it will boost its capabilities in emerging market R&D and manufacturing.