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Martin Moylan

Medtronic CEO: Ireland deal makes two companies winners

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Omar Ishrak
Medtronic CEO Omar Ishrak photographed Wednesday, Jan. 28, 2015 in his office at Medtronic's headquarters in Fridley.
Jennifer Simonson / MPR News

With this week's $50 billion acquisition of Ireland-based Covidien, Medtronic now has a much bigger footprint in the health care system.

In an interview Wednesday with MPR News, CEO Omar Ishrak said the deal was made possible when Covidien CEO Joe Almeida approached him last March about combining the two medical device companies.

Benefits for both companies

Ishrak said Covidien fit especially well with Medtronic's mission to alleviate pain and extend life — the company's business goals of ramping up growth and benefiting shareholders by developing new therapies and spreading them around the world.

"Both teams wanted this to happen," Ishrak said. "Look, in all these transactions there are obviously negotiating items. But there was a tremendous spirit of give and take because everyone understood the higher purpose, as to why there was value in this. And everyone wanted it to happen."

Complementing strategies

Covidien brings a broad portfolio of surgical tools and instruments that fit well with Medtronic's imaging and other operating room technology. The two companies' geographic reach and product portfolios complement and supplement each other, said Ishrak. Covidien also has developed treatments that can benefit from Medtronic's experience getting new products approved by regulators.

"Covidien has a series of early-stage therapies. But they're not standard of care," Ishrak said. "In the area of lung cancer, esophageal cancer. We think by doing effective clinical validation of those, we can increase their adoption levels dramatically."

The decision to put the combined companies' tax headquarters in Ireland drew lots of criticism as an unpatriotic tax dodge. But Ishrak said people came to understand the move as he explained the company would be able bring overseas profits into the United States because there would not be a big tax hit.

"We felt the reinvestment of those funds outside the U.S. in the U.S. is the right thing to do for us, the industry and it happens to be beneficial for U.S. jobs because of that reason," Ishrak said.

Ishrak said the Covidien deal means $10 billion in investments in the United States 1,000 more jobs for Minnesota, where he and the operational headquarters will remain. The companies will add jobs in engineering, finance and marketing over the next few years.