Medtronic Inc. and Covidien plc announced yesterday that they have made an agreement that Medtronic will acquire Covidien for $42.9 billion. It's a cash-and-stock transaction worth $93.22 for each Covidien share.

The acquisition will lead to a combined, comprehensive portfolio, a diversified growth profile, a wide geographic reach and 87,000 employees in over 150 countries.

"This acquisition will allow Medtronic to reach more patients, in more ways and in more places," Omar Ishrak, chairman and chief executive officer of Medtronic, said in a statement. "Our expertise and portfolio of services will allow us to serve our customers more efficiently and better address the demands of the current health care marketplace."

Once the acquisition is complete, the new entity will be called Medtronic plc. The principal executive offices will be located in Ireland, which is where both countries have a longtime presence, and the operational headquarters will be led by Ishrak and remain in Minneapolis.

This will help Medtronic advance three of their primary strategies including therapy innovation, globalization and economic value. Covidien's products will help them to expand across clinical areas and contribute to the advancement of new therapies.

"Covidien and Medtronic, when combined, will provide patients, physicians and hospitals with a compelling portfolio of offerings that will help improve care and surgical performance," Jose E. Almeida, chairman, president and chief executive officer of Covidien, said in a statement.

Since both companies have a presence in over 150 countries and combined revenue of $13 billion from outside the U.S., Medtronic will be able to serve the global market's needs better.

Medtronic will also invest $10 billion in technology in the U.S. over the next 10 years for early stage venture capital investments, acquisitions and research and development, which is much more than either company's existing plans.

"The medical technology industry is critical to the U.S. economy, and we will continue to invest and innovate and create well-paying jobs," Ishrak said in a statement. "These investments ultimately produce new therapy and treatment options that improve or save lives for millions of people around the world."

The acquisition will also lead to at least $850 million in annual pre-tax cost synergies at the close of fiscal year 2018. The synergies include optimizing global back-office, manufacturing and supply-chain infrastructure and eliminating unnecessary public company expenses.

Medtronic was financially advised by Perella Weinberg Partners LP, and Goldman, Sachs & Co. was Covidien's adviser.

More Industry Headlines