Will Stryker Litigation Be Affected by Medtronic’s Bid?
The largest manufacturer of heart rhythm devices, Medtronic Inc., is considering a takeover of London-based Smith & Nephew that could potentially move its tax domicile overseas, according to Bloomberg.com. Smith & Nephew, with a market value of $15.9 billion, is aware of Medtronic’s interest, but Medtronic’s preparations are still in the early stages, and an offer is not imminent. Medtronic is reportedly looking to broaden its offerings three specific areas: muscle and skeleton, heart, and diabetes. Attorneys are weighing in on how this might affect Stryker litigation.
One of the individuals, who had asked to remain private, stated that Medtronic is a more serious bidder for the company than Stryker Corp., another U.S.-based manufacturer of medical devices. The largest manufacturers are reportedly banding together to compete as healthcare facilities across the U.S. are cutting costs to accommodate price pressure stemming from the Obama Administration’s U.S. Affordable Care Act. Not only are medical centers searching for a handful of manufacturers to provide products, but the leaders of both Johnson & Johnson and Medtronic have stated that they are looking for planning and scale to bundle what they have to offer.
What Does This Mean for the Stryker Litigation?
Purchasing Smith & Nephew would be the latest in the $45 billion orthopedic market. However, Medtronic’s considerations were reportedly complicated when it learned of Stryker’s interest in acquiring Smith & Nephew as well. Still, a deal would be strategically wise for Medtronic because it would add products for knee and hip replacements to the company’s spine business. In other words, this acquisition may make Medtronic a “one-stop shop” for hospitals and medical facilities worldwide amid continuing pricing pressures.
Plaintiffs allege in Stryker litigation that the company’s devices caused pain, infection, reduced mobility and early device failure. As a result, plaintiffs claim that they were required to undergo painful and often extensive medical procedures to remove the implants. In many cases, patients reportedly developed additional side effects and complications following the revision procedures. Medtronic may take these Stryker litigation lawsuits into consideration prior to making a decision regarding the buyout of Smith & Nephew.
About the Tax Transfer and Domino Effect
The transaction would most likely be structured as a tax inversion, with Medtronic using Smith & Nephew’s shell to move its legal residence overseas to London, according to the sources. The gap between the lower levies in some European countries and the 35 percent federal tax rate is spurring several deals, including Pfizer’s recent effort to acquire AstraZeneca. The U.K. has a 21 percent income tax rate for corporations.
Should Medtronic or Stryker acquire Smith & Nephew, the buyer may consider moving its headquarters to the U.K., giving it better access to overseas cash. However, according to MarketWatch, the move would not necessarily impact Medtronic’s tax rate. Still, it may make a significant difference and could be a factor in the company’s decision. Medtronic, who has a large offshore cash balance, could potentially be open to a tax-inversion deal.
Victim of Defective Stryker Hips? Contact Us Today
If you or someone you love was fitted with Stryker hips and you suffered from complications that you feel were directly caused by the implants, the American Injury Attorney Group can provide you with a free consultation and help you to determine if you are eligible to join the ongoing Stryker litigation. We can connect you with an affiliated attorney who has knowledge of Stryker hips and pending lawsuits and who can work to help you seek the compensation to which you may be entitled.