On January 26, 2015, Medtronic Inc. acquired Covidien Plc in exchange for $42.9, financed through debt and stock. Medtronic, a Minneapolis based company, is the world’s largest stand-alone medical device maker, specializing in devices such as . Covidien, formerly based in Ireland, was a maker in devices used in a variety of surgeries. Medtronic’s three fundamental business strategies include therapy integration, globalization, and economic value.and Covidien (talk about business strategies). The newly combined company, Medtronic Plc, is now headquartered in Dublin, Ireland for tax purposes with its operational headquarters located in Minneapolis.
Medtronic’s CEO Omar Ishrak announced its major motives of the acquisition to be “strategic and operational alignment”, specially by expanding its product portfolios (economies of scope)
Omar Ishrak notes that Medtronic and Covidien create different, but complementary products.
This acquisition has experience negative press relating to the decision to headquarter Medtronic Plc in Dublin Ireland to qualify the company for a lower tax rate. Many view this as “tax inversion”, meaning that although it isn’t an illegal act, it might not necessary be the right thing to do ethically. Omar Ishrak (Medtronic’s CEO) negated this statement saying that the primary motivation of the acquisition was “strategic and operational alignment” and to “drive better value for patients and customers around the world.”.
Although many positives exist, the acquisition poses several challenges for Medtronic. Because Covidien has employees in 160 different countries. This cross-national acquisition is risky
After researching both Medtronic and Covidien’s product line and business strategy, and analyzing the motives for the acquisition as well as potential challenges, I believe that the newly formed Medtronic Plc had a great chance at being successful. The acquisition was friendly between Medtronic and Covidien. Any problems that existed...