Medtronic, Covidien in advanced talks to combine -WSJ

June 14 Sat Jun 14, 2014 12:23pm EDT

June 14 (Reuters) - Medical-device maker Medtronic Inc and rival Covidien PLC are in advanced talks to combine in a deal that could be worth more than $40 billion, the Wall Street Journal reported on Saturday, citing people familiar with the matter.

The Journal said the deal, which could be announced on Monday, would be structured as a so-called tax inversion, according to one of the people.

In such deals, acquirers buy companies based in countries with lower corporate tax rates than their own as a means of lowering their overall rate. Covidien is based in Ireland, which is known for having a relatively low tax rate.

Minneapolis-based Medtronic, which makes cardiovascular and orthopedic devices, has a market value of about $61 billion. Covidien, which makes devices used in surgery, is valued at about $32 billion.

Pfizer Inc recently mounted an abortive takeover bid for British-based AstraZeneca in what would have been a roughly $120 billion deal aimed in part at lowering the U.S. drug firm's corporate tax rate.

(Reporting by Eric Beech, editing by William Hardy)