Date: 2014-11-28
Type of information: Company acquisition
Acquired company: Covidien (Ireland)
Acquiring company: Medtronic (USA - MN)
Amount: $42.9 billion
Terms: * On November 28, 2014, Medtronic and Covidien announced that the European Commission has conditionally cleared Medtronic’s proposed acquisition of Covidien. The clearance decision is conditional on Medtronic’s commitment to divest Covidien’s drug coated balloon business. As previously announced, a subsidiary of Covidien entered into an agreement to divest Covidien’s drug coated balloon business to The Spectranetics Corporation, and the divestiture is expected to close shortly following completion of Medtronic’s acquisition of Covidien. The transaction is expected to close in early 2015 after receipt of certain additional regulatory clearances, approvals by both companies’ shareholders and sanction by the High Court of Ireland. * On November 26, 2014, Medtronic and Covidien announced the receipt of U.S. Federal Trade Commission (FTC) clearance of Medtronic’s proposed acquisition of Covidien.The FTC’s clearance follows Medtronic’s and Covidien’s agreement to a proposed consent order, which includes a commitment to divest certain assets related to Covidien’s drug-coated balloon catheter product. As previously announced, a subsidiary of Covidien entered into an agreement to divest these assets to The Spectranetics Corporation and the divestiture is expected to close shortly following completion of Medtronic’s acquisition of Covidien. Medtronic and Covidien also entered into a parallel consent agreement regarding the divestiture of assets related to Covidien’s drug-coated balloon catheter product with the Canadian Competition Bureau, which also announced its clearance of the transaction. * On November 17, 2014, Medtronic and Covidien announced that following a hearing before the Irish High Court the companies have scheduled shareholder meetings for Tuesday, January 6, 2015, in connection with the pending acquisition of Covidien by Medtronic. Medtronic’s special shareholder meeting will be held on January 6, 2015 at 8:00 a.m. local time at the Hyatt Regency, 1300 Nicollet Mall, Minneapolis, MN, 55403. This meeting is being held to seek shareholder approval of the plan of merger contained in the transaction agreement entered into in connection with the proposed acquisition and related matters. There will be two meetings of Covidien shareholders on January 6, 2015, in connection with the transaction. Both meetings will be held at the Conrad Dublin Hotel, Earlsfort Terrace, Dublin 2, Ireland. The first meeting, which is convened by order of the Irish High Court, will be held at 10:00 a.m. local time. Following this meeting, an extraordinary general meeting of Covidien shareholders will be held pursuant to Covidien’s articles at 10:15 a.m. local time (or, if later, as soon as possible after the conclusion or adjournment of the first meeting). Both meetings are being held to seek shareholder approval of the proposed transaction in accordance with Irish law. The approval of related matters by Covidien shareholders will also be sought at the extraordinary general meeting. * On June 15, 2014, Medtronic, a global leader in medical technology, services and solutions, and Covidien, a global healthcare technology and medical supplies provider, announced that they have entered into a definitive agreement under which Medtronic has agreed to acquire Covidien in a cash-and-stock transaction valued at $93.22 per Covidien share, or a total of approximately $42.9 billion, based on Medtronic\'s closing stock price of $60.70 per share on June 13, 2014. The Boards of Directors of both companies have unanimously approved the transaction. Upon completion of the transaction, each outstanding ordinary share of Covidien will be converted into the right to receive $35.19 in cash and 0.956 of an ordinary share of Medtronic plc. The per-share consideration represents a premium of 29% to Covidien\'s closing stock price on June 13, 2014, the last trading day prior to the announcement. Medtronic shareholders will exchange each share of stock they own in Medtronic for one ordinary share of stock in Medtronic plc. The transaction is expected to be taxable, for U.S. federal income tax purposes, to shareholders of both Medtronic and Covidien. The transaction is expected to be accretive to Medtronic\'s cash earnings in FY 2016, the first full fiscal year, and significantly accretive thereafter. The transaction is also expected to be accretive to GAAP earnings by FY 2018. The combination is expected to result in at least $850 million of annual pre-tax cost synergies by the end of fiscal year 2018. These synergies include the benefits of optimizing global back-office, manufacturing and supply-chain infrastructure, as well as the elimination of redundant public company costs. The estimate excludes any benefit from potential revenue synergies resulting from the combination of the two organizations. The consummation of the transaction is subject to certain conditions, including approvals by Medtronic and Covidien shareholders. In addition, the proposed transaction requires regulatory clearances in the U.S., the E.U., China and certain other countries. The transaction is expected to close in the fourth calendar quarter of 2014 or early 2015. Medtronic\'s financial advisor is Perella Weinberg Partners LP and its legal advisors are Cleary Gottlieb Steen & Hamilton LLP and A & L Goodbody. Covidien\'s financial advisor is Goldman, Sachs & Co. and its legal advisors are Wachtell, Lipton, Rosen & Katz and Arthur Cox. Bank of America Merrill Lynch provided committed financing for the transaction. After the completion of the transaction, the businesses of Medtronic and Covidien will be combined under a new entity to be called Medtronic plc. It will have its principal executive offices in Ireland, where Covidien\'s current headquarters resides and where both companies have a longstanding presence. Medtronic plc will be led by Mr. Ishrak, and will continue to have its operational headquarters in Minneapolis, where Medtronic currently employs more than 8,000 people.
Details: This acquisition creates a medical technology and services company with a comprehensive product portfolio and broad global reach. Once the transaction is completed, Medtronic will have significantly advanced its position as the world\'s premier medical technology and services company. The combined company will have a comprehensive product portfolio, a diversified growth profile and broad geographic reach, with 87,000 employees in more than 150 countries. With its expanded portfolio of innovative products and services, Medtronic will be a preeminent leader in delivering therapy and procedural innovations to address the major disease states impacting patients and healthcare costs around the world. Covidien has an impressive portfolio of industry- leading products that enhance Medtronic\'s existing portfolio, offer greater breadth across clinical areas, and create exciting entry points into new therapies. With a presence in more than 150 countries, the combined entity will be better able to serve global market needs. Medtronic and Covidien have combined revenues of $13 billion from outside the U.S., of which $3.7 billion comes from emerging markets. Covidien\'s extensive capabilities in emerging market R&D and manufacturing, joined with Medtronic\'s demonstrated clinical expertise across a much broader product offering, significantly increases the number of attractive solutions the new company will be able to offer to governments and major providers globally. As a direct benefit of the company\'s new financial structure, Medtronic will commit to $10 billion in technology investments over the next 10 years in areas such as early stage venture capital investments, acquisitions and R&D in the U.S., above and beyond Medtronic\'s and Covidien\'s existing plans.
Related: Medical devices Medical technologies Health services
