Posted in Medical Device Business by Nancy Crotti on January 6, 2015
Shareholders of Medtronic and Covidien on Tuesday overwhelmingly approved the companies’ multibillion-dollar merger, which will create a new Medtronic based in Ireland.
The companies only need approval from the Irish High Court to seal the deal, with a court decision potentially coming in late January or early February.
The owners of about 75% of Medtronic’s outstanding shares voted in favor of the deal, according to a statement released by Fridley, MN–based Medtronic.
Several longtime shareholders complained to Medtronic CEO Omar Ishrak about the tax inversion deal, which will cost them capital gains taxes, according to a report in the Star Tribune of Minneapolis, where the meeting took place. The Obama administration objected early on to the deal, which would free Medtronic from paying U.S. taxes.
A four-member subcommittee of the Minnesota State Board of Investment cited the tax inversion aspect of the deal in their decision not to cast votes. Minnesota Gov. Mark Dayton's office supports the deal because Medtronic officials have personally promised the governor that the merger will bring another 1000 jobs to Minnesota, according to the Star Tribune.
The objections didn’t matter in the end.
“I’d like to thank our shareholders for their support for this acquisition,” Ishrak said after the vote tally was announced, the Star Tribune reported. “The completion of the acquisition of Covidien by Medtronic will usher in a historic new chapter in the history of Medtronic and it will help us advance our longstanding mission of alleviating pain, restoring health and extending life for more patients around the world.”
The Covidien purchase marks the largest acquisition in Medtronic history. Medtronic intends to pay $35.19 per share of Covidien and exchange each Covidien share for 0.956 shares in the new company, Medtronic plc, the Star Tribune reported. When Medtronic announced the transaction in June, it listed an approximate price of $42.9 billion in stock-and-cash transaction. The final price will be determined by the value of Medtronic stock on the date of closing, which could result in a $48 billion deal.
