Report: Possible Deal May Lead Medtronic To Move Legal HQ
Medtronic is reportedly considering a possible acquisition of Smith & Nephew, a $4.4 billion orthopedic medical device company based in London.
Bloomberg, citing unnamed sources “familiar with the matter,” reported that the Fridley-based medical device manufacturer may purchase the European company in order to relocate its legal headquarters overseas for lower corporate tax rates. Bloomberg said the United Kingdom’s corporate tax rate is nearly 15 percent lower than the federal tax rate in the United States.
The media outlet said spokesmen from both Medtronic and Smith & Nephew declined to comment on the potential deal.
The unnamed sources told Bloomberg the deal is still in an early stage and that an offer for Smith & Nephew is not “imminent.”
An analyst from Sanford C. Bernstein, who Bloomberg cited, stated that the deal would make strategic sense for Medtronic by adding products to the company’s orthopedics business and increasing its access to cash it holds outside the country—which the news outlet said accounts for 65 percent of its cash flow each year.
Medtronic CEO Omar Ishrak told Bloomberg in a May interview that he wouldn’t rule out a “tax-inversion deal.”
“Strategically, we do have this current problem that we have a lot of cash outside the U.S.,” Ishrak told Bloomberg. “We encourage some kind of U.S. tax reform that allows us access to that cash in a more reasonable way.”
Twin Cities Business interviewed Ishrak late last year as part of its Interview Issue.