Medtronic pays $500m restructuring charge

Medtronic (NYSE:MDT) said yesterday it underwent internal restructuring after its $50 billion merger with Covidien that resulted in a 1-time charge of approximately $500 million in income tax to the U.S, according to an SEC filing.

As a result, the company has freed up approximately $9.3 billion in assets previously held by U.S.-controlled subsidiaries that exist outside the country, according to the SEC filing.

Medtronic moved its legal domain from Fridley, Minn. to Ireland with the merger that closed in January.

“The restructuring provides Medtronic with additional financial flexibility and increased confidence in the company’s ability to meet its financial commitments, which include continuing to target an “A” credit profile through a reduction in its debt to EBITDA ratio by the end of fiscal year 2018, returning a minimum of 50% of its free cash flow to shareholders through dividends and share repurchases, and pursuing financially disciplined M&A,” the company said in the filing.

The company said that the restructring will not affect its previous fiscal 2016 revenue outlook or guidance.

Yesterday, Medtronic said it acquired Campbell, Calif.-based stent-retriever cover developer Lazarus Effect for $100 million in an all-cash transaction.

Lazarus’ Cover device is designed to wrap stent retriever devices with a novel nitinol “mesh cover” that folds over the retreiver during clot retrieval and “candy wraps” the stent with the clot contained, Fridely, Minn.-based Medtronic said.

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