Medtronic and Covidien win shareholder approval for proposed $43B merger

Medtronic CEO Omar Ishrak

Medtronic ($MDT) and Covidien ($COV) are nearing the finish line of their pending $43 billion merger as Medtronic shareholders voted on Tuesday to approve the deal, following in the footsteps of a similar vote from Covidien shareholders.

As Medtronic spokesman Fernando Vivanco told FierceMedicalDevices, shareholders for Medtronic voted to approve the deal hours after Covidien shareholders green-lighted the merger, clearing the companies of two key hurdles in sealing their proposed deal. The companies' last stop is the Irish High Court, which may take several weeks to issue a decision about the merger.

"We're extremely pleased with the positive vote we received today by our shareholders," Medtronic CEO Omar Ishrak said in a statement. "We are convinced that the addition of Covidien's people and technologies will allow us to expedite our strategic initiative and will allow us to treat more people, in more ways and in more places around the world. We look forward to closing this transaction by the end of January or early February."

The Covidien shareholder vote bodes well for the companies, as they continue to forge ahead with the deal despite pushback from investors and lawmakers. Medtronic shareholders railed against the merger and filed lawsuits to block a shareholder vote, claiming that the acquisition would expose longtime Medtronic owners to hefty capital-gains taxes. But a Minnesota district court judge on Jan. 2 ruled against the plaintiffs and allowed voting on the proposed merger. Covidien and Medtronic recently settled a consolidated class action suit with shareholders over the deal, agreeing to make additional disclosures about the merger to appease plaintiffs.

Minneapolis-based Medtronic also faces discontent from smaller stakeholders including the Minnesota State Board of Investment (SBI), which decided not to participate in Tuesday's voting after its four-person proxy committee came to a deadlock of 2-2 on the deal during a meeting last week. Members were not swayed by the company's promise of 1,000 new Minnesota jobs, and deemed the inversion a "tax-avoidance transaction" that hands certain tax perks to executives, Deputy Attorney General Christie Eller said, as quoted by the Tribune.

"The SBI voting precedents are, as a matter of public policy, to vote against both offshore tax avoidance transactions and golden parachutes like this one," she said.

Meanwhile, Medtronic and Covidien continue to ease the pending deal past regulators. In November, the U.S. Federal Trade Commission and EU regulators green-lighted the merger after Covidien agreed to sell its clinical-stage Stellarex drug coated angioplasty balloon to Spectranetics ($SPNC) for $30 million. In December, Medtronic sold $17 billion in bonds to fund its acquisition of Dublin-based Covidien, financing the deal with debt rather than foreign cash to avoid potential hurdles with U.S. regulatory authorities.

- here's Medtronic's statement
- read the Star Tribune story
- get more from The Wall Street Journal (sub. req.)

Special Report: Med tech M&A gets much, much bigger during the first half - Medtronic muscles in on Covidien

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