U.S. medical device maker Medtronic Inc is likely to try to renegotiate the structure and terms of its $42.9 billion deal to purchase Ireland's Covidien Plc in response to new U.S. tax rules, according to people familiar with the situation.The U.S. Treasury this week reduced the ease and benefits of U.S. companies buying foreign rivals so they can move their tax domicile abroad, a practice known as inversion. Concerns that U.S. companies were using the strategy to avoid paying taxes spurred the action.The new rules make it more expensive for Medtronic to buy Covidien, by potentially requiring it to take out a loan instead of using cash held abroad, according to the people familiar with the matter and a Reuters analysis of the contract.Covidien, which originally approached Medtronic, could be asked to consider a lower price, and to take more stock and less cash, these people said. Increasing the stock component of the deal would be needed to meet the new government threshold for an inversion and resulting dip in U.S. taxes.
Covidien Public Limited Company is engaged in the development, manufacture and sale of healthcare products for use in clinical and home settings. Shares of COV traded higher by 1.78% or $1.57/share to $89.98. In the past year, the shares have traded as low as $59.72 and as high as $92.68. On average, 4579130 shares of COV exchange hands on a given day and today's volume is recorded at 4905387.
Medtronic, Inc. (Medtronic) is a medical technology company. Shares of MDT traded higher by 0.94% or $0.59/share to $63.34. In the past year, the shares have traded as low as $52.44 and as high as $67.11. On average, 7753270 shares of MDT exchange hands on a given day and today's volume is recorded at 8141784.
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