Medtronic releases statement defending Covidien deal in wake of proposed tax regulations

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After the U.S. Department of Treasury issued temporary and proposed regulations on tax inversions and other related topics, Medtronic announced in a news release on April 6 that the regulations “do not have a material financial impact on any transaction undertaken by the company.”

In January 2015, Medtronic  acquired Covidien in a cash and stock transaction for nearly $50 billion. After the deal, Medtronic moved its headquarters from Minneapolis to Covidien’s headquarters in Ireland, where corporate tax rates are lower than in the U.S.

Medtronic said its acquisition of Covidien “was undertaken for strategic reasons and has created a company that is positively impacting the lives of more patients, in more ways and in more places around the world.”

“Medtronic will continue to more fully examine the Regulations and will provide appropriate disclosure concerning any potential material impact on the company, if applicable,” the company said.

The proposed regulations have already had an impact. On April 5, one day after the U.S. Department of Treasury announcement, Pfizer, Inc. and Allergan Plc.  said they would not complete their $150 billion merger that would move Pfizer’s headquarters to Ireland.

The companies said they agreed that the Treasury’s proposed rules qualified as an “adverse tax law change” under their merger agreement. Pfizer plans on paying Allergan $150 million for reimbursement of expenses associated with the transaction.