In harmony with analyst forecasts, Medtronic Inc reported a quarterly profit due to better sales of new heart devices. It revealed that its $42.9 purchase of Covidien Plc, a hospital product manufacturer is still a plan to close by next year.
However, investors question whether this plan pushes through because merging plans of Shire Plc and AbbVie Inc was dropped due to tax rule changes being implemented in the US. Although not all favor the purchase plan of Medtronic, authorities from the company are positive about buying Covidien and are now focusing and planning for integration.
Even though they changed their financing, they keep the plan to moving forward with the transaction intact because it didn’t affect them as much as others were, according to Gary Ellis, its Chief Financial officer.
Overall, Jeff Windau of Edward Jones analyst firm said that they’re in an environment of tough competition, tough prices and hospital consolidation, and the only way to win is to offer customers a complete package. But because of new tax rules targeting tax inversion deals, Medtronic is expected to borrow larger sum of money than planned to fund the deal.