Bob CollinsWhat’s the whole Medtronic-Covidien deal all about?
It depends on who you read.
@medtronic purchase of Irish Covidien for 43 billion and move of exec. headquarters to Ireland sure to fuel debate on corporate tax rates
— esme murphy – WCCO (@esmemurphy) June 16, 2014
Maybe not.
You can’t do much better than hearing the assessment of the deal from Bill George, the former Medtronic CEO.
Writing on his blog, George makes clear what it’s not all about — a lower tax bracket. Medtronic already has a lower tax rate, he says.
I suspect the news media will focus much attention on the tax inversion that is required for Medtronic to change its legal domicile to Ireland in order to free up its overseas cash in order to finance the deal. It is interesting to note, however, that this change is not driven by tax savings, as Medtronic’s current net income tax rate of 18% will not change. Medtronic has been active in optimizing its international tax position since the 1970s with its Puerto Rico locations. In 1996 Medtronic’s European headquarters was located in Switzerland and its manufacturing position in Ireland was expanded through its 1998 acquisition of California-based AVE.
George, for the record, loves the deal.
Worldwide Medtronic will have more than 85,000 employees and a market capitalization that should exceed $100 billion, making it one of the world’s largest health care companies. This is up from 4,700 employees and $1.1 billion in market value when I joined the company in 1989. Medtronic will greatly strengthen its position in my home state of Minnesota which will become the combined headquarters for the new company.
