Creates a Medical
Technology and Services Company with a Comprehensive Product
Portfolio and Broad Global Reach that is Better Able to Improve
Healthcare Outcomes
Meaningfully
Accelerates Medtronic's Core Strategies of Therapy Innovation,
Globalization and Economic Value
Combined Revenue
of $27 Billion, including $3.7 Billion from Emerging
Markets
Transaction
Expected to be Accretive to Medtronic Cash Earnings in FY2016 and
Significantly Accretive thereafter
Medtronic Commits
to $10 Billion in Additional U.S. Technology Investments Over 10
Years
MINNEAPOLIS AND DUBLIN -
June 15, 2014 - Medtronic, Inc. (NYSE: MDT), a global
leader in medical technology, services and solutions, and Covidien
plc (NYSE: COV), a global healthcare technology and medical
supplies provider, today announced that they have entered into a
definitive agreement under which Medtronic has agreed to acquire
Covidien in a cash-and-stock transaction valued at $93.22 per
Covidien share, or a total of approximately $42.9 billion, based on
Medtronic's closing stock price of $60.70 per share on June 13,
2014.
Once the transaction is completed, Medtronic will
have significantly advanced its position as the world's premier
medical technology and services company. The combined company
will have a comprehensive product portfolio, a diversified growth
profile and broad geographic reach, with 87,000 employees in more
than 150 countries. The Boards of Directors of both companies have
unanimously approved the transaction.
"We are excited to reach this agreement with
Covidien, which further advances our mission to alleviate pain,
restore health and extend life for patients around the world," said
Omar Ishrak, Chairman and Chief Executive Officer of Medtronic.
"This acquisition will allow Medtronic to reach more patients, in
more ways and in more places. Our expertise and portfolio of
services will allow us to serve our customers more efficiently and
better address the demands of the current healthcare marketplace.
We also look forward to welcoming the Covidien team to Medtronic
and working together to improve healthcare outcomes globally."
"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," said José E. Almeida, Chairman, President and Chief
Executive Officer of Covidien. "This transaction provides our
shareholders with immediate value and the opportunity to
participate in the significant upside potential of the combined
organization. I'd like to thank our 38,000 employees whose hard
work and dedication has enabled Covidien to deliver innovative
health solutions that improve patient outcomes."
Strategic
Rationale
The combination with Covidien supports and
accelerates Medtronic's three fundamental strategies:
- Therapy
Innovation: With its expanded portfolio of innovative
products and services, Medtronic will be a preeminent leader in
delivering therapy and procedural innovations to address the major
disease states impacting patients and healthcare costs around the
world. Covidien has an impressive portfolio of
industry- leading products that enhance Medtronic's existing
portfolio, offer greater breadth across clinical areas, and create
exciting entry points into new therapies.
- Globalization:
With a presence in more than 150 countries, the combined entity
will be better able to serve global market needs. Medtronic and
Covidien have combined revenues of $13 billion from outside the
U.S., of which $3.7 billion comes from emerging markets. Covidien's
extensive capabilities in emerging market R&D and
manufacturing, joined with Medtronic's demonstrated clinical
expertise across a much broader product offering, significantly
increases the number of attractive solutions the new company will
be able to offer to governments and major providers globally.
- Economic Value:
Medtronic has adopted an intense focus on aligning with its
customers to create more value in healthcare systems around the
world - in various delivery and payment systems - by combining
products, services and insights into solutions aimed at expanding
access and reducing healthcare costs. With Covidien,
Medtronic will be able to provide a broader array of complementary
therapies and solutions that can be packaged to drive more value
and efficiency in healthcare systems. Both companies' deep
relationships with healthcare system stakeholders will provide
enormous ability to identify and create further value-based
solutions.
U.S. Investment Commitment
as a Result of Combination
The U.S. is home to the global medtech industry,
one of the most innovative global industries centered in the U.S.,
and medical devices are among the most valuable U.S. exports. The
combined company is strongly committed to the U.S. as a healthcare
innovator, strategic business partner and employer of choice.
As a direct benefit of the company's new financial
structure, Medtronic will commit to $10 billion in technology
investments over the next 10 years in areas such as early stage
venture capital investments, acquisitions and R&D in the U.S.,
above and beyond Medtronic's and Covidien'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," said Mr. Ishrak. "Medtronic has
consistently been the leading innovator and investor in U.S.
medtech, and this combination will allow us to accelerate those
investments. These investments ultimately produce new therapy
and treatment options that improve or save lives for millions of
people around the world."
Structure and
Governance
After the completion of the transaction, the
businesses of Medtronic and Covidien will be combined under a new
entity to be called Medtronic plc. It will have its principal
executive offices in Ireland, where Covidien's current headquarters
resides and where both companies have a longstanding
presence. Medtronic plc will be led by Mr. Ishrak, and will
continue to have its operational headquarters in Minneapolis, where
Medtronic currently employs more than 8,000 people.
Financial
Highlights
Upon completion of the transaction, each
outstanding ordinary share of Covidien will be converted into the
right to receive $35.19 in cash and 0.956 of an ordinary share of
Medtronic plc. The per-share consideration represents a
premium of 29% to Covidien's closing stock price on June 13, 2014,
the last trading day prior to the announcement. Medtronic
shareholders will exchange each share of stock they own in
Medtronic for one ordinary share of stock in Medtronic plc.
The transaction is expected to be taxable, for U.S. federal income
tax purposes, to shareholders of both Medtronic and
Covidien.
The proposed transaction represents compelling
value to Covidien shareholders through the cash component and
continued participation in the future growth prospects expected to
result from the combination through their ownership of
approximately 30% of the combined company.
The transaction is expected to be accretive to
Medtronic's cash earnings in FY 2016, the first full fiscal year,
and significantly accretive thereafter. The transaction is also
expected to be accretive to GAAP earnings by FY 2018.[1]
The combination is expected to result in at least
$850 million of annual pre-tax cost synergies by the end of fiscal
year 2018. These synergies include the benefits of optimizing
global back-office, manufacturing and supply-chain infrastructure,
as well as the elimination of redundant public company costs. The
estimate excludes any benefit from potential revenue synergies
resulting from the combination of the two organizations.
Through this combination, Medtronic is expected to
generate significant free cash flow, which it will be able to
deploy with greater strategic flexibility, particularly in the
U.S.
The consummation of the transaction is subject to
certain conditions, including approvals by Medtronic and Covidien
shareholders. In addition, the proposed transaction requires
regulatory clearances in the U.S., the E.U., China and certain
other countries. The transaction is expected to close in the fourth
calendar quarter of 2014 or early 2015.
Medtronic's financial advisor is Perella Weinberg
Partners LP and its legal advisors are Cleary Gottlieb Steen &
Hamilton LLP and A & L Goodbody. Covidien's financial advisor
is Goldman, Sachs & Co. and its legal advisors are Wachtell,
Lipton, Rosen & Katz and Arthur Cox.
Bank of America Merrill Lynch provided committed
financing for the transaction.
For more information about the transaction, please
go to www.globalmedtechleader.com.
The announcement required under the Irish Takeover
Rules (a Rule 2.5 announcement) has been made and is available at
the above-listed website and at www.medtronic.com
NOTE TO
INVESTORS
Webcast
information: Medtronic and Covidien will conduct a
webcast to discuss this news release tomorrow, June 16th, 2014, at
8:00 a.m., Eastern Time, which can be accessed by clicking on the
Investors link on the Medtronic home page at
http://www.Medtronic.com. Prior to the webcast, an Investor Slide
presentation will be available under the Events and Presentations
page in the Investors section of the Medtronic website.
Within 24 hours, a replay of the webcast and a transcript
will be available under the Events and Presentations page in the
Investors section of the Medtronic website.
About Medtronic
Medtronic, Inc. (www.medtronic.com), headquartered
in Minneapolis, is the global leader in medical technology -
alleviating pain, restoring health, and extending life for millions
of people around the world.
About Covidien
Covidien is a global healthcare products company
that creates innovative medical solutions for better patient
outcomes and delivers value through clinical leadership and
excellence. Covidien develops, manufactures and sells a diverse
range of industry-leading medical device and supply products. With
2013 revenue of $10.2 billion, Covidien has more than 38,000
employees worldwide in more than 70 countries, and its products are
sold in over 150 countries. Please visit www.covidien.com to learn
more about Covidien's business.
NO OFFER OR
SOLICITATION
This communication is not intended to and does not
constitute an offer to sell or the solicitation of an offer to
subscribe for or buy or an invitation to purchase or subscribe for
any securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the acquisition, the merger or otherwise,
nor shall there be any sale, issuance or transfer of securities in
any jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
IMPORTANT ADDITIONAL
INFORMATION WILL BE FILED WITH THE SEC
New Medtronic will file with the Securities and
Exchange Commission (the "SEC") a registration statement on Form
S-4 that will include the Joint Proxy Statement of Medtronic and
Covidien that also constitutes a Prospectus of New Medtronic.
Medtronic and Covidien plan to mail to their respective
shareholders the Joint Proxy Statement/Prospectus (including the
Scheme) in connection with the transactions. INVESTORS AND
SHAREHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS
(INCLUDING THE SCHEME) AND OTHER RELEVANT DOCUMENTS FILED OR TO BE
FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT MEDTRONIC, COVIDIEN,
NEW MEDTRONIC, THE TRANSACTIONS AND RELATED MATTERS. Investors and
security holders will be able to obtain free copies of the Joint
Proxy Statement/Prospectus (including the Scheme) and other
documents filed with the SEC by New Medtronic, Medtronic and
Covidien through the website maintained by the SEC at www.sec.gov.
In addition, investors and shareholders will be able to obtain free
copies of the Joint Proxy Statement/Prospectus (including the
Scheme) and other documents filed by Medtronic and New Medtronic
with the SEC by contacting Medtronic Investor Relations at
investor.relations@medtronic.com or by calling 763-505-2696,
and will be able to obtain free copies of the Joint Proxy
Statement/Prospectus (including the Scheme) and other documents
filed by Covidien by contacting Covidien Investor Relations at
investor.relations@covidien.com or by calling 508-452-4650.
PARTICIPANTS IN THE
SOLICITATION
Medtronic, New Medtronic and Covidien and certain
of their respective directors and executive officers and employees
may be considered participants in the solicitation of proxies from
the respective shareholders of Medtronic and Covidien in respect of
the transactions contemplated by the Joint Proxy
Statement/Prospectus. Information regarding the persons who may,
under the rules of the SEC, be deemed participants in the
solicitation of the respective shareholders of Medtronic and
Covidien in connection with the proposed transactions, including a
description of their direct or indirect interests, by security
holdings or otherwise, will be set forth in the Joint Proxy
Statement/Prospectus when it is filed with the SEC. Information
regarding Medtronic's directors and executive officers is contained
in Medtronic's Annual Report on Form 10-K for the fiscal year ended
April 26, 2013 and its Proxy Statement on Schedule 14A, dated July
12, 2013, which are filed with the SEC. Information regarding
Covidien's directors and executive officers is contained in
Covidien's Annual Report on Form 10-K for the fiscal year ended
September 27, 2013 and its Proxy Statement on Schedule 14A, dated
January 24, 2014, which are filed with the SEC.
Medtronic Cautionary
Statement Regarding Forward-Looking Statements
Statements contained in this communication that
refer to New Medtronic's and/or Medtronic's estimated or
anticipated future results, including estimated synergies, or other
non-historical facts are forward-looking statements that reflect
Medtronic's current perspective of existing trends and information
as of the date of this communication. Forward looking statements
generally will be accompanied by words such as "anticipate,"
"believe," "plan," "could," "should," "estimate," "expect,"
"forecast," "outlook," "guidance," "intend," "may," "might,"
"will," "possible," "potential," "predict," "project," or other
similar words, phrases or expressions. It is important to note that
Medtronic's goals and expectations are not predictions of actual
performance. Actual results may differ materially from
Medtronic's current expectations depending upon a number of factors
affecting New Medtronic's business, Medtronic's business,
Covidien's business and risks associated with the proposed
transactions. These factors include, among others, the inherent
uncertainty associated with financial projections; restructuring in
connection with, and successful close of, the Covidien acquisition;
subsequent integration of the Covidien acquisition and the ability
to recognize the anticipated synergies and benefits of the Covidien
acquisition; the risk that the required regulatory approvals for
the proposed transactions are not obtained, are delayed or are
subject to conditions that are not anticipated; the anticipated
size of the markets and continued demand for
Medtronic's and Covidien's products;
the impact of competitive products and pricing; access to available
financing (including financing for the acquisition or refinancing
of Medtronic or Covidien debt) on a timely basis and on reasonable
terms; the risks of fluctuations in foreign currency exchange
rates; the risks and uncertainties normally incident to the medical
device industry, including competition in the medical device
industry; product liability claims; the difficulty of predicting
the timing or outcome of pending or future litigation or government
investigations; variability of trade buying patterns; the timing
and success of product launches; the difficulty of predicting the
timing or outcome of product development efforts and regulatory
agency approvals or actions, if any; potential for adverse pricing
movement; costs and efforts to defend or enforce intellectual
property rights; difficulties or delays in manufacturing; reduction
or interruption in supply; product quality problems; the
availability and pricing of third party sourced products and
materials; risks associated with self-insurance and commercial
insurance; successful compliance with governmental regulations
applicable to New Medtronic's, Medtronic 's and Covidien's
facilities, products and/or businesses; changes in the laws and
regulations, affecting among other things, pricing and
reimbursement of pharmaceutical products; health care policy
changes; risks associated with international operations; changes in
tax laws or interpretations that could increase New Medtronic 's or
Medtronic's consolidated tax liabilities, including, if the
transaction is consummated, changes in tax laws that would result
in New Medtronic being treated as a domestic corporation for United
States federal tax purposes; the loss of key senior management or
scientific staff; and such other risks and uncertainties detailed
in Medtronic's periodic public filings with the Securities and
Exchange Commission, including but not limited to Medtronic's
Annual Report on Form 10-K for the fiscal year ended April 26, 2013
and from time to time in Medtronic's other investor communications.
Except as expressly required by law, each of New Medtronic and
Medtronic disclaims any intent or obligation to update or revise
these forward-looking statements.
Covidien Cautionary
Statement Regarding Forward-Looking Statements
Statements contained in this communication that
refer to Covidien's estimated or anticipated future results,
including estimated synergies, or other non-historical facts are
forward-looking statements that reflect Covidien's current
perspective of existing trends and information as of the date of
this communication. Forward looking statements generally will be
accompanied by words such as "anticipate," "believe," "plan,"
"could," "should," "estimate," "expect," "forecast," "outlook,"
"guidance," "intend," "may," "might," "will," "possible,"
"potential," "predict," "project," or other similar words, phrases
or expressions. It is important to note that Covidien's goals and
expectations are not predictions of actual performance. Actual
results may differ materially from Covidien's current expectations
depending upon a number of factors affecting Covidien's business,
Medtronic's business and risks associated with the proposed
transactions. These factors include, among others, the inherent
uncertainty associated with financial projections; the timing to
consummate the proposed transactions; the risk that a condition to
closing of the proposed transactions may not be satisfied; the risk
that the required regulatory approvals for the proposed
transactions are not obtained, are delayed or are subject to
conditions that are not anticipated; New Medtronic's ability to
achieve the synergies and value creation contemplated by the
proposed transactions; the anticipated size of the markets and
continued demand for Medtronic 's and Covidien's products; New
Medtronic's ability to promptly and effectively integrate
Medtronic's and Covidien's businesses; the diversion of management
time on transaction-related issues; competitive factors and
market conditions in the industry in which Covidien operates;
Covidien's ability to obtain regulatory approval and customer
acceptance of new products, and continued customer acceptance of
Covidien's existing products; and the other risks identified in
Covidien's periodic filings including its Annual Report on Form
10-K for the fiscal year ended September 27, 2013, and from time to
time in Covidien's other investor communications. We caution you
that the foregoing list of important factors is not exclusive. In
addition, in light of these risks and uncertainties, the matters
referred to in Covidien's forward-looking statements may not
occur. Covidien undertakes no obligation to publicly update or
revise any forward-looking statement as a result of new
information, future events or otherwise, except as may be required
by law.
Statement Required by the
Irish Takeover Rules
The directors of Medtronic accept responsibility
for the information contained in this announcement other than that
relating to Covidien and the Covidien Group and the directors of
Covidien and members of their immediate families, related trusts
and persons connected with them. To the best of the knowledge and
belief of the directors of Medtronic (who have taken all reasonable
care to ensure that such is the case), the information contained in
this announcement for which they accept responsibility is in
accordance with the facts and does not omit anything likely to
affect the import of such information.
The directors of Covidien accept responsibility
for the information contained in this announcement relating to
Covidien and the directors of Covidien and members of their
immediate families, related trusts and persons connected with them.
To the best of the knowledge and belief of the directors of
Covidien (who have taken all reasonable care to ensure such is the
case), the information contained in this announcement for which
they accept responsibility is in accordance with the facts and does
not omit anything likely to affect the import of such
information.
Perella Weinberg Partners LP which is a registered
broker dealer with the U.S. Securities and Exchange Commission, is
acting for Medtronic and New Medtronic and no one else in
connection with the Transaction and will not be responsible to
anyone other than Medtronic and New Medtronic for providing the
protections afforded to clients of Perella Weinberg Partners LP, or
for giving advice in connection with the Transaction or any matter
referred to herein.
Goldman Sachs, which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting for Covidien and no one else in
connection with the Transaction and will not be responsible to
anyone other than Covidien for providing the protections afforded
to clients of Goldman Sachs, or for giving advice in connection
with the Transaction or any matter referred to herein.
Dealing Disclosure
Requirements
Under the provisions of Rule 8.3 of the Irish
Takeover Panel Act, 1997, Takeover Rules 2013 (the "Irish Takeover
Rules"), if any person is, or becomes, 'interested' (directly or
indirectly) in, 1% or more of any class of 'relevant securities' of
Covidien or Medtronic, all 'dealings' in any 'relevant securities'
of Covidien or Medtronic (including by means of an option in
respect of, or a derivative referenced to, any such 'relevant
securities') must be publicly disclosed by not later than 3:30 pm
(Irish time) on the 'business' day following the date of the
relevant transaction. This requirement will continue until the date
on which the Scheme becomes effective or on which the 'offer
period' otherwise ends. If two or more persons co-operate on the
basis of any agreement, either express or tacit, either oral or
written, to acquire an 'interest' in 'relevant securities' of
Covidien or Medtronic, they will be deemed to be a single
person for the purpose of Rule 8.3 of the Irish Takeover
Rules.
Under the provisions of Rule 8.1 of the Irish
Takeover Rules, all 'dealings' in 'relevant securities' of Covidien
by Medtronic or 'relevant securities' of Medtronic by Covidien, or
by any party acting in concert with either of them, must also be
disclosed by no later than 12 noon (Irish time) on the 'business'
day following the date of the relevant transaction.
A disclosure table, giving details of the
companies in whose 'relevant securities' 'dealings' should be
disclosed, can be found on the Irish Takeover Panel's website at
www.irishtakeoverpanel.ie.
'Interests in securities' arise, in summary, when
a person has long economic exposure, whether conditional or
absolute, to changes in the price of securities. In particular, a
person will be treated as having an 'interest' by virtue of the
ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Irish
Takeover Rules, which can also be found on the Irish Takeover
Panel's website. If you are in any doubt as to whether or not you
are required to disclose a dealing under Rule 8, please consult the
Irish Takeover Panel's website at www.irishtakeoverpanel.ie or
contact the Irish Takeover Panel on telephone number +353 1 678
9020 or fax number +353 1 678 9289.
No Profit Forecast / Asset
Valuations
No statement in this announcement is intended to
constitute a profit forecast for any period, nor should any
statements be interpreted to mean that earnings or earnings per
share will necessarily be greater or lesser than those for the
relevant preceding financial periods for Medtronic or Covidien or
New Medtronic as appropriate. No statement in this
announcement constitutes an asset valuation.
General
This summary should be read in conjunction with
the full text of the Rule 2.5 announcement. Appendix I to the Rule
2.5 announcement contains further details of the sources of
information and bases of calculations set out in this announcement;
Appendix II to the Rule 2.5 announcement contains definitions of
certain expressions used in this announcement; Appendix III to the
Rule 2.5 announcement contains the Conditions of the Acquisition
and the Scheme; Appendix IV to the Rule 2.5 announcement sets out
the report from PricewaterhouseCoopers in respect of certain merger
benefit statements made in this announcement; Appendix V to the
Rule 2.5 announcement contains the report from Perella Weinberg
Partners LP, in respect of certain merger benefit statements made
in this announcement and Appendix VI to the Rule 2.5 announcement
sets out the Transaction Agreement.
The release, publication or distribution of this
announcement in or into certain jurisdictions may be restricted by
the laws of those jurisdictions. Accordingly, copies of this
announcement and all other documents relating to the Acquisition
are not being, and must not be, released, published, mailed or
otherwise forwarded, distributed or sent in, into or from any
Restricted Jurisdiction. Persons receiving such documents
(including, without limitation, nominees, trustees and custodians)
should observe these restrictions. Failure to do so may constitute
a violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law, the companies involved
in the proposed Acquisition disclaim any responsibility or
liability for the violations of any such restrictions by any
person.
Any response in relation to the Acquisition should
be made only on the basis of the information contained in the
Scheme Circular or any document by which the Acquisition and the
Scheme are made. Medtronic Shareholders and Covidien
Shareholders are advised to read carefully the formal documentation
in relation to the proposed Transaction once the Scheme Circular
has been dispatched.
Pursuant to Rule 2.6(c) of the Irish Takeover
Rules, this announcement will be available to Medtronic employees
on Medtronic's website (www.medtronic.com) and Covidien employees
on Covidien's website (www.covidien.com).
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN
WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF
SUCH JURISDICTION.
-end-
[1] The statement that this acquisition is
earnings accretive should not be interpreted to mean that the
earnings per share in the current or any future financial period
will necessarily match or be greater than those for the relevant
preceding financial period.
Contacts:
Rob Clark
VP, Global Communications
+1-763-505-2682
rob.clark@medtronic.com
Fernando Vivanco
Sr. Dir., Global Communications
+1-763-505-3780
fernando.vivanco@medtronic.com
Jeff Warren
VP, Investor Relations
+1-763-505-2696
jeff.warren@medtronic.com
Peter Lucht
VP, External Communications
+1-508-452-4168
peter.lucht@covidien.com
Lisa Clemence
Dir., Corporate Communications
+1-508-452-4375
lisa.clemence@covidien.com
Coleman Lannum, CFA
VP, Investor Relations
+1-508-452-4343
cole.lannum@covidien.com
Todd Carpenter
Sr. Dir., Investor Relations
+1-508-452-4363
todd.carpenter@covidien.com
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Medtronic, Inc. via Globenewswire
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