As part of the deal, the executive leadership of the company will move to Ireland, with Medtronic operational headquarters remaining in Minneapolis where it employs more than 8,000 people.
The new entity will have 87,000 employees in 150 countries around the world.
Commenting on the news Medtronic chairman Omar Ishrak, who will move to Ireland to head up the corporate management team, said:
“This acquisition will allow Medtronic to reach more patients, in more ways and in more places. Our expertise and portfolio of services will allow us to serve our customers more efficiently and better address the demands of the current healthcare marketplace.”
The deal could be beneficial for the new entity from a tax perspective, with combined revenues €13 billion in revenues from non-US markets now potentially not having to be banked in the States.
Ishrak told Reuters that the deal was not driven by tax considerations.
In a statement, Covidien and Medtronic said that the primary purpose of the deal was to “combine products, services and insights into solutions aimed at expanding access and reducing healthcare costs”.
Medtronic maintained that the new company will remain “committed to the US as a healthcare innovator, strategic business partner and employer of choice”.
The deal, which still must be approved by shareholders of both companies, is likely to go through towards the end of this year or at the start of 2015.
It is expected to result in at least $850 million (€628 million) in annual pre-tax cost savings by the end of fiscal year 2018.