(Reuters) - U.S. medical device maker Medtronic Inc is likely to try to renegotiate the structure and terms of its $42.9 billion deal to buy Ireland’s Covidien Plc in response to new U.S. tax rules, according to people familiar with the situation.
The U.S. Treasury this week reduced the ease and benefits of U.S. companies buying foreign rivals so they can move their tax domicile abroad, a practice known as inversion. Concerns that U.S. companies were using the strategy to avoid paying taxes spurred the action.
The new rules make it more expensive for Medtronic to buy Covidien, by potentially requiring it to take out a loan instead of using cash held abroad, according to the people familiar with the matter and a Reuters analysis of the contract.
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