Medtronic has financing for $42.9 billion acquisition of Covidien

By Lisa Kerner

Charlotte, N.C., June 16 – Medtronic, Inc. said it has committed financing from Bank of America Merrill Lynch to fund its $42.9 billion acquisition of Covidien plc.

The purchase price includes $5 billion of Covidien debt, according to Medtronic chief financial officer Gary Ellis.

Medtronic agreed to acquire Covidien in a cash-and-stock transaction valued at $93.22 per Covidien share, based on Medtronic's closing stock price of $60.70 per share on June 13.

Covidien shareholders will receive $35.19 in cash and 0.956 of an ordinary share of Medtronic plc.

Medtronic shareholders will exchange each share of stock they own in Medtronic for one ordinary share of stock in the combined new entity called Medtronic plc.

Closing is expected in late 2014 or early 2015, Ellis said during a conference call on Monday.

Medtronic is maintaining its longstanding commitment to return 50% of free cash flow to shareholders, Ellis said. Once the acquisition is complete, the combined company is expected to have greater flexibility to deploy cash, especially in the United States.

The combined entity will be better able to serve global market needs, with $3.7 billion of revenues coming from emerging markets, Medtronic chairman and chief executive officer Omar Ishrak said.

Medtronic is a medical technology company based in Minneapolis. Covidien is a Dublin-based health-care products company.

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