Cleary and Wachtell lead as Medtronic buys Covidien for $43bn

Cleary Gottlieb Steen & Hamilton and Wachtell Lipton Rosen & Katz, alongside Irish heavyweights A&L Goodbody and Arthur Cox, are leading on the mammoth $42.9bn (£25.3bn) merger of medical technology giants Medtronic and Covidien.

The transaction will see Medtronic buy Covidien for $42.9bn in cash and stock, with the merged entity relocating its corporate headquarters to Ireland. Covidien is already headquartered in Dublin, although both companies are listed on the New York Stock Exchange (NYSE) and the enlarged Medtronic will retain its US listing.

If successful the deal will be the largest ever in the pharmaceuticals sector, beating the $31.8bn AstraZeneca merger in 1998. Pfizer recently launched a £69bn bid for AstraZeneca (28 April 2014), but pulled out earlier this month.

Cleary Gottlieb and A&L Goodbody are acting for Medtronic. Cleary Gottlieb is fielding a team headed by partners Victor Lewkow and Matthew Salerno, with tax advice from partners Yaron Reich and Jason Factor. Finance partners Laurent Alpert and Meme Peponis and employment partner Arthur Kohn are also involved, alongside competition partners George Cary in Washington DC and Enrique Gonzalez-Diaz in Brussels. 

A&L Goodbody’s team is led by New York resident partner Cian McCourt and Dublin corporate partners Alan Casey and Mark Ward, working alongside tax partners Paul Fahy and Peter Maher, finance partner Séamus Ó Cróinín and corporate partner James Grennan.

Wachtell and Arthur Cox are providing US and Irish advice respectively to Covidien. Wachtell’s team is led by corporate partners Adam Emmerich and Benjamin Roth, with the team also including competition partner Nelson Fitts, executive compensation partner Adam Shapiro, litigation partner Rachelle Silverberg, restructuring and finance partner Eric Rosof and tax partner Jodi Schwartz.

Arthur Cox managing partner Brian O’Gorman led the firm’s work on the deal, alongside corporate partners Geoff Moore, Stephen Ranalow and Stephen Hegarty and tax partner Fintan Clancy.

Skadden Arps Slate Meagher & Flom tax partners Sally Thurston and Nathaniel Carden are providing tax advice to Covidien.

Matheson is advising Medtronic financial adviser Perella Weinberg Partners, with the team led by corporate partners Patrick Spicer and George Brady as well as financial institutions head Tim Scanlon and banking partner Libby Garvey.

The deal was announced yesterday (15 June) and has been unanimously approved by both companies’ boards. The merged company will have 87,000 employees in 150 countries worldwide and combined revenue of $27bn.

Although the corporate headquarters will be in Dublin, Medtronic will continue to have its operational headquarters in Minneapolis.

Bank of America Merrill Lynch has provided committed financing for the transaction.

Background to this deal:

The Medtronic acquisition of Covidien is the latest in a string of high-value transactions involving US and Irish pharmaceutical and medical technology companies with the resulting merged entity choosing to headquarter in Dublin, giving the company the advantage of Ireland’s 12.5 per cent corporation tax rate. A&L Goodbody and Arthur Cox have both had lead roles on several of these transactions.

Last year, following a hostile takeover bid by Royalty Pharma (23 April 2013), Irish-headquartered biotechnology company Elan was bought by US company Perrigo in an $8.6bn deal (31 July 2013). A&L Goodbody’s Cian McCourt and Alan Casey acted for Elan throughout alongside Cadwalader Wickersham & Taft.

Later in the year US-listed Actavis made a similar bid for Warner Chilcott – like Covidien, headquartered in Ireland and listed on the NYSE. The $8.5bn deal saw Arthur Cox corporate partners Geoff Moore, Maura McLaughlin and Chris McLaughlin act for Warner Chilcott, alongside Davis Polk & Wardwell partners Michael Davis and Oliver Smith. Matheson, which had also advised Royalty Pharma on its unsuccessful bid for Elan, was brought on for Actavis with partner Patrick Spicer leading alongside Latham & Watkins’ Scott Shean, Charles Ruck, and Stephen Amdur.

In 2012, A&L Goodbody advised US company Jazz on its acquisition of privately-owned Irish pharmaceutical outfit Azur, alongside Cooley and Baker & McKenzie. Azur was advised by McCann FitzGerald and Byrne Wallace in Dublin and Mayer Brown.

Technology and pharmaceuticals continue to be key areas for Ireland, and the US its major source of foreign direct investment, as detailed in our recent special reports Pharma’s market and The American connection.