(Story updated at 11:15 a.m. ET Monday, June 16.)
U.S. medical-device manufacturer Medtronic has agreed to buy Ireland-based competitor Covidien for $42.9 billion in cash and stock.
The combined company would have its executive offices in Dublin, where it could benefit from Ireland's lower corporate tax rates. But the merged company would continue to operate in Minneapolis, where Medtronic employs more than 8,000, the companies said late Sunday in a statement.
Medtronic is paying a 29% premium on Covidien's stock price as of Friday. The shares had closed at $72.02 on the New York Stock Exchange.
Shares of both companies surged in premarket trading Monday.
The deal is the latest in a series of acquisitions by medical-device manufacturers. The companies are seeking to expand their offerings and contain costs in response to price curbs forced by the nation's new healthcare law.