Why Medtronic is moving HQ to Ireland in Covidien deal - KMSP-TV

Why Medtronic is moving HQ to Ireland in Covidien deal

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FRIDLEY, Minn. (KMSP) -

Medtronic will move its headquarters from Minnesota to Ireland as part of a $42.9 billion purchase of medical technology company Covidien. The merged company’s “operational” headquarters will stay in Fridley, Minn., along with the CEO’s office, but the legal headquarters will be in Ireland.

The move to Ireland will save the company billions in taxes. The corporate tax rate in Ireland is just 12.5 percent compared to the 35 percent rate in the U.S.

Deals like the Medtronic-Covidien merger have drawn criticism from Washington, with overseas headquarters shifts viewed as purse tax dodging strategies. These deals are commonly referred to as “tax inversion” – allowing companies to keep cash overseas that would otherwise be lost to the IRS in the U.S.

Once the purchase is approved by regulators, Medtronic will be the largest medical device and supply company in the world, employing more than 87,000 in 150 countries.

Medtronic is one of the Twin Cities Top 10 largest companies by revenue, and has been based in the metro since it was founded 65 years ago. In a statement, Gov. Mark Dayton said he has been assured that no jobs will be lost as a result of the acquisition.

"We were assured that the company intends to keep its operational headquarters here in Minnesota and that no jobs will be lost here due to this transaction," the governor's statement read. "Company officials also told us that Medtronic intends to create over 1,000 new medical technology-related jobs in Minnesota during the next 5 years."

In the announcement, Medtronic said it will commit $10 billion toward technology over the next decade. The board of directors at both companies unanimously approved the move. As long as regulators approve, the transaction should be complete by early 2015.

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