August 22, 2014 by Arezu Sarvestani
Some of Medtronic’s shareholders aren’t pleased about the structure of the $43 billion mega-merger with Covidien, which will stick some long-time backers with significant fees.
Not everyone is thrilled about the impending mega-merger of medtech titans Medtronic (NYSE:MDT) and Covidien (NYSE:COV). Although investors have rallied around the $43 billion deal and have lauded its structure as a corporate inversion, many stockholders are angry that they’re being stuck with a tax penalty.
Some shareholders have sued to block the merger, but others showed up in person at Medtronic’s latest annual conference to voice their concerns, according to local reports.
All Medtronic shareholders, including executives and board members, will face a capital gains tax when the Covidien deal closes. Former CEO Bill George told the audience at this week’s meeting that he plans to donate some of his shares to charities and family trusts in order to offset part of the $1.5 million he estimated he owes on the deal, according to the Star Tribune.
Medtronic’s acquisitions have never been a taxable event in the past, and the structure of the new deal has already spurred at least one lawsuit from shareholders who claim the deal leaves them in the cold.