Boston, MA 06\/16\/2014 (wallstreetpr) \u2013\u00a0Covidien plc (NYSE:COV)<\/b>, a manufacturer and marketer of healthcare products for clinical and home use, has agreed to be acquired by Medtronic, Inc. (NYSE:MDT)<\/b> for $42.9 billion in stock and cash transaction.<\/p>\n
Shareholders of Covidien will receive $93.22 per share in the deal, signaling 29 percent premium over the closing price of the stock on Friday. Covidien is headquartered in Ireland where the combined company will be based.<\/p>\n
The combination of the two companies is expected to create an industry giant that will not only be able to take on rivals in a mightier way, but also expand its reach to more customers and places.<\/p>\n
According to industry experts, the combination of Covidien and Medtronic appear to be part of a broader scheme by providers to deliver a variety of products and services all under one roof. That is happening because hospitals and doctors have also changed the way they deal with suppliers in that they prefer working with few suppliers who can provide more integrated solutions.<\/p>\n
Foreign reincorporation<\/b><\/p>\n
The acquisition of Covidien plc (NYSE:COV) will also support Medtronic’s efforts to reincorporate outside the U.S., where corporate taxes are deemed high. The movement of the corporate headquarters of the combined company to Ireland will allow the new company to enjoy corporate taxes in the neighborhood of 12.5 percent as opposed to 35 percent in the U.S.<\/p>\n
In addition to the ability to reduce its tax burden by domiciling abroad, Medtronic will also use its profits earned from foreign operations without incurring steep taxes.<\/p>\n
Seeking tax havens<\/b><\/p>\n
Many U.S. companies are increasing seeking tax havens to run away from the steep corporate tax practice at home. Europe appears to be an attractive base for U.S. companies escaping tax burden. While some companies have been successful in their tax maneuvers, other have failed in such attempts, and Pfizer Inc (NYSE:PFE)<\/b> is part of the sad story as it failed to win over the British pharmaceutical company AstraZeneca even after sweetening its offer.<\/p>\n
Regulatory hurdle<\/b><\/p>\n
The tie-up of Covidien plc (NYSE:COV) and Medtronic will require regulatory the approval from several agencies in the U.S., Europe and China to close.<\/p>\n","protected":false},"excerpt":{"rendered":"
Boston, MA 06\/16\/2014 (wallstreetpr) \u2013\u00a0Covidien plc (NYSE:COV), a manufacturer and marketer of healthcare products for clinical and home use, has agreed to be acquired by […]<\/p>\n","protected":false},"author":32,"featured_media":25905,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":{"twitter_2902945987_2902945987":""},"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[264],"tags":[7326,3021,7327,1022,993,2745],"stock_ticker":[],"class_list":["post-25904","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-health","tag-covidien-plc-nysecov","tag-medtronic-inc-nysemdt","tag-nysecov","tag-nysemdt","tag-nysepfe","tag-pfizer-inc-nysepfe","entry"],"acf":[],"yoast_head":"\n