Medical technology company Medtronic has entered into a definitive agreement to acquire rival Covidien for $42.9 billion.
Here are five things to know about the deal.
1. After the deal closes, Medtronic will have a significantly expanded portfolio of products and services. The company will also increase in size — post-acquisition, it will have 87,000 employees, a market presence in more than 150 countries, and annual revenue of about $27 billion.
2. According to a company press release, Medtronic will now be able to bundle products and services "to drive more value and efficiency in healthcare systems." The deal puts Medtronic closer to its goal of being a "one-stop shop" for hospitals, according to a report in The Wall Street Journal.
3. As part of the transaction, Medtronic will reincorporate in Ireland, and its principle executive offices will be in Covidien's home base of Dublin. The move will allow Medtronic to pay less in corporate taxes, according to a report in The New York Times.
4. The company says it plans to use the financial stability gained in the deal to invest $10 billion over 10 years in health IT research and development, startups and acquisitions in the U.S. "The medical technology industry is critical to the U.S. economy, and we will continue to invest and innovate and create well-paying jobs,"Omar Ishrak, chairman and CEO of Medtronic, said in a news release.
5. The company will keep its operational headquarters in Minneapolis. Staff at Covidien's U.S. headquarters in Mansfield, Mass., will likely shrink, according to an article in the Boston Globe. "It's expected that there will be some synergies in headquarters jobs, and the companies will address that as part of the integration planning," Covidien Vice President Peter Lucht told the Globe.
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