In a case of the worst possible timing, Medtronic has announced its decision to move its executive base to Ireland to avail of the country’s 12.5pc corporate tax rate after its US$42.9bn (€31.7bn) acquisition of Covidien.
With Medtronic already operating out of its Galway base and Covidien being based in Dublin, the cash and stock deal to purchase one of its biggest competitors has come at the worst possible time for the companies as US multinational companies operating in Ireland have come under the spotlight after Apple and the Irish Government have found themselves up for investigation by the European Commission for evading tax.
However, Medtronic have stated that the reason to move its executive operations to Ireland is not for tax reasons, rather that they feel it would be complimentary to Covidien’s existing operations here, despite the fact they will be expected to make significant tax savings by locating here.
Medtronic’s chief executive Omar Ishrak said about the deal in an interview covered by Reuters: “The real purpose of this, in the end, is strategic, both in the intermediate term and the long term. It is good for the US in that we will make more investment in US technologies, which previously we could not.”
The multi-billion merger now puts further pressure on the world’s largest producers of medical devices, Johnson & Johnson and has expanded Medtronic’s reach into other devices including spinal implants and insulin pumps.
Medical devices image via Shutterstock