Dominic Coyle
Shareholders in Irish-headquartered medical device business Covidien have overwhelmingly approved the proposed $48 billion acquisition of the business by US industry giant Medtronic.
Over 99 per cent of shares voted at an extraordinary general meeting of the company on Tuesday backed the proposal. Allowing for shares not voted at the meeting, over 78 per cent of the company’s shares were voted in favour of the proposal .
In the US, Medtronic shareholders also voted for the transaction, with holders of over 75 per cent of the company’s stock backing the megadeal.
Medtronic is paying $35.19 per Covidien share. Covidien shareholders will also receive 0.956 of a share in the new Medtronic for every Covidien share they now own.
The merger had been valued at $42.9 billion when it was originally announced last year but Medtronic shares have risen by around 18 per cent since that time.
The merger of the two companies had been seen as one of the target of a clampdown on corporate inversions – where US companies relocate their domicile to jurisdictions with a lower corporate tax rate by buying a company resident there – by US President Barack Obama late last year.
Medtronic had been keen to pursue the controversial arrangement, not least to give it access to revenue earned abroad without paying US corporation taxes on its repatriation. The company has said that it holds $13.5 billion in overseas accounts. If repatriated, around $3.5 billion would have gone in taxes.
The tighter US rules on corporate inversions, among other things, blocked Medtronic and others using cash held abroad to fund such deals. As a result, it was forced to raise $16 billion in what was the largest corporate bond issue of 2014 to fund the deal.
A similar proposed deal between Abbvie and Irish-headquartered Shire Pharma, which had been valued at $54 billion, fell apart as a result of change in US rules.
Medtronic is the world's largest standalone medical device maker while Covidien, formerly part of Tyco International, specialises in surgical products. The merger is expected to create a company close in size to the medical device business of Johnson & Johnson, the world leader, with 87,000 employees in more than 150 countries. Both companies have operated in Ireland for many years.
US regulators approved the plan last November on condition that Medtronic would sell its drug-coated balloon catheter business.
Additional reporting, Reuters
