Irish Sweepstakes

“There was no doubt about it: if you wanted to succeed you had to go away. You could do nothing in Dublin.” 

― James Joyce, Dubliners

That was then. This is now:

Medtronic Inc. announced Sunday night that it will pay $42.9 billion to acquire the Irish surgical device maker Covidien. As a result of the deal, Medtronic will move its executive headquarters to ­Ireland to take advantage of substantial tax benefits.

What sorts of benefits?

[Medtronic CEO Omar] Ishrak explained that the combination will create financial flexibility with the capital generated through the profitability of the combined companies, unlike the current situation when avoiding tax expense has meant that profits earned abroad have not been repatriated and invested in the United States.

Ishrak cited Sunday’s $10 billion commitment to fund investments in the U.S. over the next ten years as an example of what will be enabled by greater financial flexibility.

“The only thing we get is the cash flow that is generated by the Covidien legacy company,” he said. “Medtronic can use this cash flow to invest in the U.S.”

Will the investment take place in Minnesota? Well, maybe. But not necessarily. If you don't think that Rick Perry has Ishrak on his speed dial, you're not paying attention. For his part, Ishrak is making all the right noises about Minnesota:

Ishrak repeated the jobs pledge Sunday night, explaining that the Medtronic headquarters in Minnesota “will get even more of a focus” after the merger is completed. 

“The current operating headquarters of Covidien in Boston will, in effect, be integrated into Medtronic in Minnesota,” he said.

Inasmuch as corporate taxes are higher in Minnesota than they are in Massachusetts, that's somewhat surprising, but as always things change. As you'll recall, Northwest Airlines made a lot of promises to the state that its successor, Delta Airlines, hasn't felt especially compelled to keep.