Medtronic re-thinking Covidien acquisition

Medtronic Inc., which has made an offer to acquire Covidien for $ 42.9 billion is likely to try to renegotiate the terms of its deal in response to new US tax changes. The U.S. Treasury has reduced attraction of U.S. companies buying companies outside the US so they can move their tax domicile abroad, a practice known as inversion. The principle reason for these takeovers was to reduce the tax burden. The new rules make it more expensive for Medtronic to buy Covidien, by potentially requiring it to take out a loan instead of using cash held abroad.