Medtronic sticks to plans to buy Irish firm

Medtronic officials say they remain committed to purchasing Covidien, a medical device maker based in Ireland.

The deal would allow Medtronic to move its legal headquarters from Fridley to Dublin to take advantage of Ireland's lower corporate tax rate.

Such maneuvers, called tax inversions, have drawn fire from President Obama and congressional Democrats, who say they are unpatriotic. Proposed federal legislation would prohibit such deals, and the Treasury Department is also considering restrictions.

But in a conference call with investors Tuesday, Medtronic CEO Omar Ishrak pointed out that the company would continue to pay significant amounts in U.S. taxes.

"We will continue to pay federal, state, and local income taxes on all U.S. earnings, as well as Social Security taxes, property taxes, and the medical device tax," he said.

Medtronic announced last June that it planned to acquire the Irish company for about $43 billion. Analysts were quick to point out that the move would bring Medtronic significant tax advantages.

Minnesota Gov. Mark Dayton has said Medtronic executives have assured them that the Ireland deal is about federal taxes, not state taxes. He said that, as an Irish-based company, Medtronic would be spared having to pay federal taxes on foreign income.

Medtronic's payroll includes roughly 8,000 people in the Twin Cities. Company officials say they plan to increase the size of their Twin Cities workforce by 1,000 over the next several years.

Also Tuesday, Medtronic reported net income for the company's first quarter of $871 million. That was a drop of 9 percent from the same period a year ago as expenses rose faster than sales.