Medical Device Giants Close Controversial $49.9B Merger
Two of the largest global medical device companies, Medtronic and Covidien, on Jan. 27 finalized their deal to become a single company, following Irish High Court approval. The cash-and-stock transaction is valued at approximately $49.9 billion.
Medtronic’s acquisition of the Dublin, Ireland-based Covidien creates a business with $27 billion in revenue and some 85,000 employees in 160 countries. Medtronic’s operational headquarters will remain in Minneapolis, but its principal executive offices now will be based in Ireland, the company said.
For the medical device industry, the deal is unprecedented in size. The combined company, Medtronic plc, led by CEO Omar Ishrak, plans to add 1,000 new jobs to the Minnesota area.
“The culmination of this acquisition marks a significant milestone in our industry, creating a company uniquely positioned to alleviate pain, restore health and extend life for more patients around the world,” Ishrak said in a statement on Jan. 27.
Yet, the merger remains controversial, as many lawmakers claim that tax evasion elements are driving the acquisition.
With the deal now approved, attention turns to the complex, three-year process of integrating Covidien’s surgical supplies with Medtronic’s high-tech medical devices. The medical device industry also continues to debate what impact the monstrous deal will have on the sector as a whole.
While some investment experts have called Medtronic and Covidien a perfect match that will introduce needed efficiencies to the marketplace, some naysayers express concern that small medical device startups will have a hard time breaking intro the industry now.