Medtronic Down on Tax Inversion Rules

Medtronic ($MDT) is learning a lesson today that many of us have known for a long time—you simply can’t become Irish because you feel it. Shares of MDT are down after the government announced new rules for “inversions.” That’s what Medtronic is trying to do as it buys Ireland’s Covidien and move its HQ to the Emerald Isle. The move would cut their tax bill by a good amount.

I’ll be honest with you-I don’t know what impact the new rules will have on the MDT/COV deal. And it sounds like no one else knows at this point either. The lawyers are still looking it over.

The key issue is a company’s holding of cash outside the United States. In Medtronic’s case, they hold close to $14 billion outside the country. Medtronic wants to loan some of that to their new parent, but the new rules might stop that.

Bloomberg reported that Medtronic released a statement saying, “We are studying the Treasury’s actions. We will release our perspective on any potential impact on our pending acquisition of Covidien following our complete review.”

Posted by on September 23rd, 2014 at 1:52 pm


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