Minnesota Investment Board will not support Medtronic-Covidien inversion deal
- Although the planned $43 billion merger deal between Minneapolis-based Medtronic and Dublin-based Covidien is still likely to move forward after a vote on Tuesday, a key investor—the state of Minnesota—is not supporting the deal, the Wall Street Journal reports.
- The Minnesota State Board of Investment has invested funds worth roughly $78 billion total and is also a minor (though symbolically important) shareholder in Medtronic and Covidien. It isn't supporting the tax-inversion merger based on concerns about preferential tax perks for company executives.
- Medtronic, a medical device company, employs more than 8,000 people in the state of Minnesota.
As part of the deal, Medtronic is asking shareholders to approve coverage of excise taxes for senior executives and board members, so the execs can avoid unexercised stock options. The fact that Medtronic is based in Minnesota and the state itself will not support the deal has caught the attention of investors and onlookers, leading to conversations about the practice of tax-inversion deals.
Medtronic needs a 50% shareholder vote and Covidien needs a 75% shareholder vote in order for the deal to go through. In fact, the state board holds less than 1% of each company—so this situation is largely symbolic and most likely will not affect the outcome of the deal.
A representative for Minnesota's governor was one of two investment board members to vote in favor of the deal, based on Medtronic's CEO's promise that the merger will bring 1,000 jobs to the state, according to the Journal.