Medical-device maker Medtronic announced Friday that it will use $16 billion in new borrowing rather than funds it currently holds overseas to finance the cash portion of its planned acquisition of Ireland-based medical supplier Covidien.
The change in financing is being read in securities markets as a way for Medtronic to sidestep any tax issues that might arise from using overseas funds to partially pay for the acquisition. The total value of the deal, in cash and planned stock to be issued to former Covidien shareholders, is roughly $43 billion.
Once the deal closes in 2015, Medtronic will create a new holding company, Medtronic PLC, which will be based in Ireland. The move is one of a flurry of such deals this year seen by critics as designed to allow the companies to reduce their U.S. tax burden.