Medtronic’s $42.9-bn Covidien deal approved by US regulator

Medtronic Inc,  the world's fourth-largest medical device company, has received US regulatory approval for its proposed $42.9-billion acquisition of Dublin-based Covidien Plc on condition that it sells its drug-coated balloon catheter business.

The US Federal Trade Commission approved the deal after Medtronic said that it would sell its drug-coated catheter business to Colorado-based Spectranetics Corp.

The deal, which has been approved by regulators in the US and Canada, has yet to be approved by the EU, China and certain other countries.

In June, Medtronic, the second-largest maker of medical devices, struck a deal to buy Covidien for $42.9 billion in cash and stock in order to relocate to Ireland and use profits it makes outside of the US.

Medtronic, based in Minneapolis, had emphasised that the transaction is not an inversion deal where US pharmaceutical companies have recently acquired or attempted to buy overseas peers in order to domicile themselves outside the US to save on higher taxes in their home country.

Medtronic had last month announced that it would sell its vascular therapies product line and technology in order to win US antitrust approval (See: Medtronic offers concessions to the EU for its $43-bn Covidien acquisition .)

Medtronic develops and manufactures devices and therapies to treat more than 30 chronic diseases, including heart failure, Parkinson's disease, urinary incontinence, Down-Syndrome, obesity, chronic pain, spinal disorders, and diabetes.

The 65-year old company, which operates in more than 140 countries and employs over 46,000 people, posted a net income of $3.5 billion in 2013 on revenues of $16.6 billion.

Covidien, the $42.4-billion healthcare products company, makes a diverse range of industry-leading product lines in three segments - medical devices, pharmaceuticals and medical supplies.

Formerly Tyco Healthcare, Dublin-based Covidien is one of the world's largest producers of bulk acetaminophen, the largest supplier of opioid pain medications in the US, and is among the top 10 generic pharmaceutical manufacturers in the US, based on prescriptions.

The company posted net profit of $1.7 billion in 2013 on revenues of $19.2 billion.

A merged company will have 87,000 employees, a presence in more than 150 countries, and have combined revenues of $13 billion from outside the US, of which $3.7 billion will be from emerging markets.

The deal will also bring in annual pre-tax cost synergies of at least $850 million by the end of fiscal year 2018.