In light of new U.S. tax rules tightening the reins on corporate inversions, Medtronic could be poised to revise its $42.9 billion deal with Ireland-based Covidien.
The Treasury Department's issuance of a notice cracking down on inversions was designed to create uncertainty, says Terry Haines, head of political analysis at investment research firm ISI Group. By that count, the move has succeeded. Questions abound. Will one of the affected companies sue to challenge the legal validity of the agency's action? And what's next? The 42-page notice requests comment and says that the Treasury Department and the IRS expect to issue additional guidance.
Treasury Secretary Jacob Lew yesterday unveiled a plethora reforms to make tax inversion more difficult and less attractive, potentially killing a plethora of pending mergers with foreign companies, including Medtronic's $43 billion tie-up with Ireland's Covidien.
Treasury Secretary Jacob Lew told the Urban Institute yesterday that "in the very near future" he will decide on steps President Obama can take to curb tax inversion deals without congressional action.
The Medtronic-Covidien integration team must be working overtime juggling not only existing products but also those in the deal pipeline. The pair hasn't slowed down at all--between them they have disclosed 5 acquisitions since their own merger announcement in mid-June, three of them this week alone.
Covidien today announced the acquisition of privately held Reverse Medical, a provider of vascular devices, for an undisclosed sum.
Corporate tax inversions, including Medtronic's planned shift to Ireland following its purchase of Covidien, are causing a backlash among some shareholders stuck with a big tax bill becaues of capital gains taxes associated with the deal.
The FDA approved Covidien's fixes to the manufacturing process of its recalled Pipeline Embolization Device and Alligator Retrieval Device for treating brain aneurysms.
Covidien and Medtronic announced more than 45 people will join a newly created team to tackle integration issues during their merger.
Speculation is building that Minneapolis-based Medtronic will modify its offer for Dublin-based Covidien.