Medtronic Completes Covidien Acquisition for $50B - Analyst Blog

Medical technology giant Medtronic, Inc. (MDT) has finally completed the $42.9 billion takeover of its Irish counterpart Covidien plc (COV), subsequent to the receipt of the Irish Court's verdict in favor of the acquisition agreement.

Per the terms of this agreement, Medtronic, Inc. and Covidien plc will now become wholly-owned subsidiaries of the new combined holding company – Medtronic plc, with its principal executive offices based in Ireland. However, the combined company's operational headquarters will remain in Minnesota.

The cash-and-stock transaction of this agreement is valued at approximately $49.9 billion, based on Medtronic's closing stock price of $75.59 per share on Jan 26, 2015.  Under the terms of the transaction, each ordinary outstanding shareholder of Covidien as of the closing date will receive $35.19 in cash and 0.956 of an ordinary share of Medtronic plc.

Moreover, as per this agreement, each common stock outstanding shareholder of Medtronic, Inc. as of the closing date will receive one ordinary share of Medtronic plc.

The closure of the transaction will not affect the results of Medtronic, Inc.'s fiscal third quarter, which ended on Friday, Jan 23, 2015.

Management expects the shares of Medtronic plc to start trading on NYSE from Tuesday, Jan 27, 2015, under the symbol “MDT.”

Management at Medtronic, Inc. has recognized this historical merger, probably one of the largest in the MedTech industry, as a momentous event, leading to the creation of a unique company that combines the extensive and innovative abilities of both Medtronic and Covidien.

The combined company, with officially joint forces of over 85,000 employees present in more than 160 countries and annual revenues of $27.4 billion in 2014, will now expedite Medtronic's three fundamental strategies of therapy innovation, globalization and economic value.

With the completion of this acquisition, a new medical device major will be born that will dominate a considerable market share in both the U.S. and Europe.  The deal will also allow the combined company to reduce its corporate tax liability as it will repatriate cash stored in the international markets.

We expect the newly formed Medtronic plc to win a larger market share owing to the combined strength of two MedTech behemoths, and garner more profits in the near term.

Currently, both Medtronic, Inc. and Covidien retain a Zacks Rank #3 (Hold). Some better-ranked medical products stocks are ICU Medical, Inc. (ICUI) and Phibro Animal Health Corp. (PAHC). Both these stocks sport a Zacks Rank #1 (Strong Buy).

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MEDTRONIC (MDT): Free Stock Analysis Report
 
COVIDIEN PLC (COV): Free Stock Analysis Report
 
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