On Sunday, Minneapolis-based Medtronic Inc. made public that it has agreed to purchase Covidien, a healthcare supplier headquartered in Mansfield, for cash and stock totaling approximately $42.9 billion. The announcement was issued jointly by the two companies, and stated the transaction was approved unanimously by both Boards of Directors.
Covidien’s US headquarters and corporate staff are based in Mansfield. The company has about 1,800 Massachusetts workers, many of whom are from Mansfield, and about 38,000 global employees. Neither company commented on the effect the deal would have on local employees, but it is likely the merger will result in job cuts to improve efficiency.
The acquisition will advance Medtronic’s position as a leader in the medical devices industry. Omar Ishrak, Chairman and CEO of Medtronic, stated the merger “will allow Medtronic to reach more patients, in more ways and more places.”
Although Covidien’s headquarters are based in the US, the company is incorporated in Ireland. The new company, which will be called Medtronic plc once the two combine, will have its corporate headquarters in Ireland as well. There are great tax advantages to this move, as Ireland has a lower corporate tax rate than the US.
According to the Boston Globe, the merger is also likely a response to the Affordable Care Act. Many medical companies have recently combined operations to provide more integrated care and to reduce their costs.