Medtronic axes 150 jobs in new Irish tax domicile

Cue the Medtronic ($MDT)-Covidien layoffs. Medtronic is cutting 150 jobs in Ireland, months after closing its megadeal with Covidien and shifting its domicile to the country to enjoy the benefits of a lower tax rate.

The devicemaker is axing jobs at its Dublin-based Cherrywood call center, which offers support services in different languages to European clients, The Irish Times reports. Staff found out on Monday at a meeting with senior management that their jobs will be relocated to Poland next June and that the facility will be shuttered. Needless to say, the aftermath has not been pleasant, Irish workers group Communications Workers Union told the newspaper.

"Unfortunately the shocking news was just delivered yesterday and (the staff) are just coming to terms with it," CWU head of organizing Ian McArdle said, as quoted by the Irish Times. "Quite understandably the staff are in a state of shock."

Medtronic is staying mum on the cuts. But more details about the layoffs will probably come to light after an upcoming meeting between with staff and the CWU, McArdle told the newspaper.

For a while, things seemed quiet on the layoffs front for Medtronic/Covidien. Over the summer, about 6 months after closing its deal for Covidien, Medtronic had grown its number of employees by 7% to 92,000 people.

Medtronic CEO Omar Ishrak

But Medtronic also has plans to save $300 million to $350 million from its acquisition of Covidien, and part of that strategy involves focusing on synergies and eliminating redundancies. In September, Medtronic CEO Omar Ishrak said that the company was on track to meeting its cost-savings goal, already completing over half of its value capture initiatives and "executing on our indirect sourcing plans" to "achieve meaningful savings."

At least so far, Medtronic seems well on its way toward reaping the benefits from its Covidien deal. The company in September said that it moved $9.8 billion to the U.S. thanks to its tax inversion deal. And Medtronic has access to about $12.5 billion in cash with $5.5 billion sitting overseas, giving the company the "financial flexibility" to deliver on its financial commitments and potentially setting the stage for "more aggressive M&A going forward," Leerink equity analyst Danielle Antalffy said at the time.

- read the Irish Times story

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