August 11, 2014 by Arezu Sarvestani
The terms of Medtronic’s unusual $43 billion acquisition of Covidien means that all MDT shareholders are subject to paying a capital gains tax, including executives and board members.
The mega-merger between Medtronic (NYSE:MDT) andCovidien (NYSE:COV) has ruffled some feathers among shareholders concerned about the looming capital gains tax that’s going to hit when the deal closes, but regular shareholders aren’t the only ones facing a bill. Executives and board members are no more insulated from the tax than any other shareholders, according to a Medtronic presentation.
The merger includes a provision to cover costs of an extra excise tax that applies only to certain “Section 16b” officers of the company as well as members of the board of directors, but those individuals are still on the hook for paying the capital gains tax on their shares once the deal closes.