Medtronic’s Acquisition Causes Anxiety Among Shareholders

Medtronic, the world’s largest medical technologies company, recently made headlines when the Minneapolis-based company bought the Irish healthcare products company, Covidien, for nearly $43 billion.

The purchase, according to Medtronic executives, will enable the company to invest more aggressively, cut back taxes drastically, and thus create a bigger profit for shareholders—but the investors themselves have not been so quick to celebrate.

See, Medtronic allowed the foreign company to keep a 20% stake in the merger in order to keep the majority of its profits overseas free from American taxes. This move, called an inversion, qualifies as a “taxable event,” and the company’s shareholders are the ones left with the bill—as much as 33 cents on the dollar.

Medtronic urges shareholders, especially individuals, to remain patient as the long-term benefits of the recent acquisition begin to emerge. But this promise hasn’t satisfied everyone. The repercussions of this transaction are complicated, and many … Read More