S-4 1 d741931ds4.htm FORM S-4 Form S-4
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As filed with the U.S. Securities and Exchange Commission on July 14, 2014

Registration No. 333-[—]

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

MEDTRONIC HOLDINGS LIMITED

(Exact name of registrant as specified in its charter)

 

 

 

Ireland   3845   98-1183488

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

 

25-28 North Wall Quay

Dublin 1 Ireland

+353 1 649-2000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Bradley E. Lerman, Esq.

General Counsel

Medtronic Holdings Limited

c/o Medtronic, Inc.

710 Medtronic Parkway

Minneapolis, MN 55432

(763) 514-4000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

With copies to:

 

Victor I. Lewkow, Esq.

Matthew P. Salerno, Esq.

Cleary Gottlieb Steen &

Hamilton LLP

One Liberty Plaza

New York, NY 10006

(212) 225-2000

 

Bradley E. Lerman, Esq.

Senior Vice President, General

Counsel and Corporate Secretary

Medtronic, Inc.

710 Medtronic Parkway

Minneapolis, MN 55432

(763) 514-4000

 

John H. Masterson, Esq.

Senior Vice President and

General Counsel

Covidien plc

20 On Hatch

Lower Hatch Street

Dublin 2, Ireland

+353 1 438-1700

 

Adam O. Emmerich, Esq.

Benjamin M. Roth, Esq.

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

(212) 403-1000

 

 

Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and upon completion of the merger and the acquisition described in the enclosed joint proxy statement/prospectus.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ¨

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ¨

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of

securities to be registered

 

Amount

to be

registered

 

Proposed

maximum

offering price

per share

 

Proposed

maximum

aggregate

offering price

 

Amount of

registration fee

Ordinary Shares, nominal value $0.0001 per share

  1,491,577,969(1)   Not applicable   $91,811,465,719(2)   $11,825,317(3)

 

 

(1) Represents the maximum number of the registrant’s ordinary shares estimated to be issuable upon the completion of the transaction described herein. Calculated as the sum of (a) the product obtained by multiplying (i) the sum of (x) 451,683,194 Covidien ordinary shares outstanding as of July 9, 2014 and (y) 3,852,563 Covidien ordinary shares subject to share awards outstanding as of July 9, 2014 (other than options) that were granted prior to June 15, 2014 in respect of which the scheme consideration will be paid in accordance with the Transaction Agreement (assuming any performance-based vesting conditions are satisfied at maximum performance) by (ii) 0.956, which is the stock exchange ratio under the Transaction Agreement, (b) the product obtained by multiplying (i) the sum of (x) 13,529,109 Covidien ordinary shares issuable pursuant to options outstanding as of July 9, 2014 and (y) 1,541,470 Covidien shares subject to share awards outstanding as of July 9, 2014 (other than options) that were granted or could be granted on or following June 15, 2014 and prior to completion of the transaction by (ii) the sum of (x) 0.956 and (y) 0.551, the quotient obtained by dividing $35.19 by $63.91, the volume weighted average price of Medtronic common stock on the New York Stock Exchange over the 10 trading day period ending on July 10, 2014, and (c) the sum of (i) 990,349,488 Medtronic common shares outstanding as of July 9, 2014, (ii) 32,812,919 Medtronic common shares issuable pursuant to options outstanding as of July 9, 2014, and (iii) 10,217,408 Medtronic common shares subject to stock awards outstanding as of July 9, 2014 (other than options).
(2) Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act and computed pursuant to Rule 457(f)(1) and (f)(3) and 457(c) of the Securities Act. Calculated as (a) the sum of (i) the product obtained by multiplying (x) $90.575 (the average of the high and low prices of Covidien ordinary shares on July 10, 2014), by (y) 470,606,336 Covidien ordinary shares (the total number of Covidien ordinary shares outstanding or issuable pursuant to options or subject to share awards as of July 9, 2014), and (ii) the product obtained by multiplying (A) $63.11 (the average of the high and low prices of Medtronic common shares on July 10, 2014), by (B) 1,033,379,815 Medtronic common shares (the total number of Medtronic common shares outstanding or issuable pursuant to options or subject to stock awards other than options as of July 9, 2014), minus (b) the product obtained by multiplying (i) 455,535,757 Covidien ordinary shares (the total number of Covidien ordinary shares outstanding or issuable pursuant to share awards granted prior to June 15, 2014 (other than options) as of July 9, 2014), by (ii) $35.19, which is the amount of the cash portion of the scheme consideration.
(3) Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $128.80 per $1,000,000 of the proposed maximum aggregate offering price.

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such dates as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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Information contained herein is subject to completion or amendment. A registration statement relating to the Medtronic Holdings Limited securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. If you are in any doubt about this transaction, you should consult an independent financial advisor who, if you are taking advice in Ireland, is authorized or exempted under the Investment Intermediaries Act, 1995 or the European Communities (Markets in Financial Instruments) Regulations (Nos. 1 to 3) 2007.

 

SUBJECT TO COMPLETION, DATED JULY 14, 2014

PRELIMINARY COPY

 

 

LOGO

To our Shareholders:

You are cordially invited to attend a special meeting of the shareholders of Medtronic, Inc. to be held on [—], 2014 at [—] local time, at [—].

As previously announced, on June 15, 2014, Medtronic entered into a Transaction Agreement with Covidien plc to acquire Covidien through the formation of a new holding company incorporated in Ireland that will be renamed Medtronic plc, which is referred to as New Medtronic. The acquisition of Covidien will be effected by means of a “scheme of arrangement” under Irish law, subject to the approval of the Irish High Court and Covidien shareholders. As consideration for the acquisition, Covidien shareholders will receive $35.19 in cash and 0.956 of a New Medtronic ordinary share for each Covidien share.

In connection with the acquisition, Aviation Merger Sub, LLC (“MergerSub”), a Minnesota limited liability company, will merge with and into Medtronic, with Medtronic as the surviving corporation in the merger. Medtronic shareholders will receive one ordinary share of New Medtronic from or at the direction of MergerSub for each Medtronic share held by them at closing.

Upon completion of such acquisition and merger, based on the number of Medtronic and Covidien shares outstanding as of [—], 2014, the former shareholders of Medtronic are expected to own approximately 70%, and the former shareholders of Covidien are expected to own approximately 30%, of the outstanding ordinary shares of New Medtronic. The exchange of Medtronic shares for New Medtronic ordinary shares and cash in lieu of fractional shares will be a taxable transaction to Medtronic shareholders. The New Medtronic ordinary shares are expected to be listed on the New York Stock Exchange under the symbol “MDT.” Based on the number of Medtronic and Covidien shares outstanding as of the record date, the total number of New Medtronic ordinary shares that are expected to be issued in connection with the acquisition and the merger is approximately [—].

We urge all Medtronic shareholders to read the accompanying joint proxy statement/prospectus, including the Annexes and the documents incorporated by reference in the accompanying joint proxy statement/prospectus, carefully and in their entirety. In particular, we urge you to read carefully “Risk Factors” beginning on page [29] of the accompanying joint proxy statement/prospectus.

Medtronic is holding a special meeting of shareholders to seek your approval to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic. You are also being asked to vote at the special meeting on proposals relating to the creation of “distributable reserves,” which are required under Irish law in order for New Medtronic to, among other things, be able to pay dividends following completion of the transaction, as well as the non-binding, advisory approval of specified compensatory arrangements between Medtronic and its named executive officers relating to the transaction and certain adjournments of the special meeting; however, the acquisition is not conditioned on approval of these proposals.

Your proxy is being solicited by the board of directors of Medtronic. After careful consideration, the Medtronic board of directors has unanimously approved the Transaction Agreement and determined that the entry into the Transaction Agreement and the merger are fair and in the best interest of Medtronic and its shareholders. The Medtronic board of directors recommends unanimously that you vote “FOR” the


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proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic and “FOR” the other proposals described in the accompanying joint proxy statement/prospectus. In considering the recommendation of the board of directors of Medtronic, you should be aware that directors and executive officers of Medtronic have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders. See “The Transaction—Interests of Certain Persons in the Transaction—Medtronic.” Your vote is very important. Please vote as soon as possible whether or not you plan to attend the special meeting by following the instructions in the accompanying joint proxy statement/prospectus.

On behalf of the Medtronic board of directors, thank you for your consideration and continued support.

 

Very truly yours,
Omar Ishrak
Chairman and Chief Executive Officer
Medtronic, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the transaction or determined if the accompanying joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

For the avoidance of doubt, the accompanying joint proxy statement/prospectus is not intended to be and is not a prospectus for the purposes of the Investment Funds, Companies and Miscellaneous Provisions Act of 2005 of Ireland (the “2005 Act”), the Prospectus (Directive 2003/71/EC) Regulations 2005 of Ireland or the Prospectus Rules issued under the 2005 Act, and the Central Bank of Ireland has not approved this document.

The accompanying joint proxy statement/prospectus is dated [—], 2014, and is first being mailed to shareholders of Medtronic on or about [—], 2014.


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ADDITIONAL INFORMATION

If you have questions about the transaction or the special meeting, or if you need to obtain copies of the accompanying joint proxy statement/prospectus, proxy card or any documents incorporated by reference in the joint proxy statement/prospectus, you may contact the contact listed below. You will not be charged for any of the documents you request.

Medtronic Investor Relations

710 Medtronic Parkway

Minneapolis, Minnesota 55432

[—]

investor.relations@medtronic.com

If you would like to request documents, please do so by [—], 2014, in order to receive them before the special meeting.

For a more detailed description of the information incorporated by reference in the accompanying joint proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information” beginning on page [] of the accompanying joint proxy statement/prospectus.


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Information contained herein is subject to completion or amendment. A registration statement relating to the Medtronic Holdings Limited securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This document shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. If you are in any doubt about this transaction, you should consult an independent financial advisor who, if you are taking advice in Ireland, is authorized or exempted under the Investment Intermediaries Act, 1995 or the European Communities (Markets in Financial Instruments) Regulations (Nos. 1 to 3) 2007.

 

SUBJECT TO COMPLETION, DATED JULY 14, 2014

PRELIMINARY COPY

 

 

LOGO

COVIDIEN PLC

20 On Hatch, Lower Hatch Street,

Dublin 2, Ireland

To our Shareholders:

You are cordially invited to attend two special meetings of the shareholders of Covidien plc, which is referred to as Covidien. The first, the special Court-ordered meeting, is to be held on [—], 2014 at [—] local time, at [—], and the second, the extraordinary general meeting of shareholders, referred to as the EGM, is to be held on [—], 2014 at [—] local time, at [—], or, if later, as soon as possible after the conclusion or adjournment of the special Court-ordered meeting.

As previously announced, on June 15, 2014, Covidien entered into a transaction agreement with Medtronic, Inc., which is referred to as Medtronic, pursuant to which Medtronic will acquire Covidien through the formation of a new holding company incorporated in Ireland, which is referred to as New Medtronic. The acquisition of Covidien will be effected by means of a “scheme of arrangement” under Irish law.

As consideration for the acquisition, Covidien shareholders will receive $35.19 in cash and 0.956 of a New Medtronic ordinary share for each Covidien share that they own. Immediately following and conditioned on the consummation of the acquisition, Aviation Merger Sub, LLC, a Minnesota limited liability company, will merge with and into Medtronic, with Medtronic as the surviving corporation in the merger. Each share of Medtronic common stock then issued and outstanding will be cancelled and automatically converted into the right to receive one New Medtronic ordinary share. Upon completion of such acquisition and merger, based on the number of Medtronic and Covidien shares outstanding as of [—], 2014, the former shareholders of Medtronic are expected to own approximately 70%, and the former shareholders of Covidien are expected to own approximately 30%, of the outstanding ordinary shares of New Medtronic. The receipt of New Medtronic ordinary shares and cash for Covidien ordinary shares will be a taxable transaction to Covidien shareholders for U.S. federal income tax purposes.

You are being asked to vote on a proposal to approve the scheme at both special meetings, as well as three additional proposals being presented at the EGM that shareholders must approve in order to properly implement the scheme. You are also being asked to vote at the EGM on proposals relating to the creation of “distributable reserves,” which are required under Irish law in order for New Medtronic to, among other things, be able to pay dividends following completion of the transaction, as well as the non-binding, advisory approval of specified compensatory arrangements between Covidien and its named executive officers relating to the transaction; however, the acquisition is not conditioned on approval of these proposals. The scheme also is subject to approval by the Irish High Court. More information about the transaction and the proposals is contained in the accompanying joint proxy statement/prospectus. We urge all Covidien shareholders to read the accompanying joint proxy statement/prospectus, including the Annexes and the documents incorporated by reference therein, carefully and in their entirety. In particular, we urge you to read carefully “Risk Factors” beginning on page [29] of the accompanying joint proxy statement/prospectus.

Your proxy is being solicited by the board of directors of Covidien. After careful consideration, the board of directors of Covidien has unanimously determined that the transaction agreement and the transactions contemplated by the transaction agreement, including the scheme, are fair to and in the best interests of Covidien and its shareholders and that the terms of the scheme are fair and reasonable. The Covidien board recommends unanimously that you vote “FOR” all proposals. In considering the recommendation of the Covidien board, you should be aware that directors and executive officers of Covidien have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders. Your vote is very important. Please vote as soon as possible, whether or not you plan to attend the special meetings, by following the instructions in the accompanying joint proxy statement/prospectus.


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On behalf of the Covidien board of directors, thank you for your consideration and continued support.

Very truly yours,

José E. Almeida

Chairman, President and Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the transaction or determined if the accompanying joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

For the avoidance of doubt, the accompanying joint proxy statement/prospectus is not intended to be and is not a prospectus for the purposes of the Investment Funds, Companies and Miscellaneous Provisions Act of 2005 of Ireland (the “2005 Act”), the Prospectus (Directive 2003/71/EC) Regulations 2005 of Ireland (as amended) or the Prospectus Rules issued under the 2005 Act, and the Central Bank of Ireland has not approved this document.

The accompanying joint proxy statement/prospectus is dated [—], 2014, and is first being mailed to shareholders of Covidien on or about [—], 2014.


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ADDITIONAL INFORMATION

The accompanying joint proxy statement/prospectus incorporates by reference important business and financial information about Covidien from documents that are not included in or delivered with the joint proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain the documents incorporated by reference in the joint proxy statement/prospectus by requesting them in writing or by telephone from Covidien at the following address, email or telephone number:

Covidien

15 Hampshire Street

Mansfield, MA 02048

(508) 452-4650

investor.relations@covidien.com

www.covidien.com. “Investor Relations” tab

In addition, if you have questions about the transaction or the special meetings, or if you need to obtain copies of the accompanying joint proxy statement/prospectus, proxy cards, or any documents incorporated by reference in the joint proxy statement/prospectus, you may contact the contact listed below. You will not be charged for any of the documents you request.

D.F. King and Co., Inc.

48 Wall Street, 22nd Floor

New York, NY 10005

(800) 488-8035 (toll free)

(212) 269-5550 (banks and brokers collect)

If you would like to request documents, please do so by [—], 2014, in order to receive them before the special meetings.

For a more detailed description of the information incorporated by reference in the accompanying joint proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information” beginning on page [] of the accompanying joint proxy statement/prospectus.


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LOGO

MEDTRONIC

Medtronic World Headquarters

Minneapolis, Minnesota 55432

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

 

Time:

   [—] local time

Date:

   [—], 2014

Place:

   [—]

Purpose:

  

(1) To adopt the plan of merger contained in the Transaction Agreement, dated as of June 15, 2014, among Medtronic, Covidien plc, Medtronic Holdings Limited (formerly known as Kalani I Limited), referred to in the accompanying joint proxy statement/prospectus as “New Medtronic,” Makani II Limited (“IrSub”), Aviation Acquisition Co., Inc. (“U.S. AcquisitionCo”) and Aviation Merger Sub, LLC (“MergerSub”) and approve the revised memorandum and articles of association of New Medtronic;

 

(2) To approve the reduction of the share premium account of New Medtronic to allow for the creation of distributable reserves of New Medtronic, which are required under Irish law in order to allow New Medtronic to make distributions and to pay dividends and repurchase or redeem shares following completion of the transaction;

 

(3) To consider and vote upon, on a non-binding, advisory basis, specified compensatory arrangements between Medtronic and its named executive officers relating to the transaction; and

 

(4) To approve adjournments of the Medtronic special meeting to another time or place if necessary or appropriate in order (i) to solicit additional proxies if there are insufficient votes at the time of the Medtronic special meeting to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic, (ii) to provide to Medtronic shareholders in advance of the special meeting any supplement or amendment to the joint proxy statement/prospectus or (iii) to disseminate any other information which is material to the Medtronic shareholders voting at the special meeting.

 

The enclosed joint proxy statement/prospectus describes the purpose and business of the special meeting, contains a detailed description of the merger and the Transaction Agreement and includes a copy of the Transaction Agreement as Annex A and the conditions of the acquisition of Covidien plc and the related scheme of arrangement as Annex B. Please read these documents carefully before deciding how to vote.

Record Date:

   The record date for the Medtronic special meeting has been fixed as 5:00 p.m. (Eastern Time in the U.S.) on [—], 2014. Medtronic shareholders of record at that time are entitled to vote at the Medtronic special meeting.

More information about the transaction and the proposals is contained in the accompanying joint proxy statement/prospectus. We urge all Medtronic shareholders to read the accompanying joint proxy statement/prospectus, including the Annexes and the documents incorporated by reference in the accompanying joint proxy statement/prospectus, carefully and in their entirety. In particular, we urge you to read carefully “Risk Factors” beginning on page [29] of the accompanying joint proxy statement/prospectus.


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The Medtronic board of directors recommends unanimously that Medtronic shareholders vote “FOR” the proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic, “FOR” the proposal to reduce the share premium account of New Medtronic to allow the creation of distributable reserves, “FOR” the approval, on a non-binding, advisory basis, of specified compensatory arrangements between Medtronic and its named executive officers and “FOR” the Medtronic adjournment proposal.

 

By order of the Board of Directors
Bradley E. Lerman
Senior Vice President, General Counsel and Corporate Secretary
[—], 2014

YOUR VOTE IS IMPORTANT

If you are a record holder, you may vote your shares by using a toll-free telephone number or electronically over the internet as described on the enclosed proxy card. We encourage you to file your proxy using either of these options if they are available to you. Alternatively, you may mark, sign, date and mail your proxy card in the postage-paid envelope provided. If you hold your shares through a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee in order to instruct them how to vote such shares. The method by which you vote does not limit your right to vote in person at the special meeting. We strongly encourage you to vote.


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LOGO

COVIDIEN PLC

20 On Hatch, Lower Hatch Street,

Dublin 2, Ireland

NOTICE OF COURT MEETING OF SHAREHOLDERS

NOTICE OF COURT MEETING

IN THE HIGH COURT No. 2014/[—] COS

IN THE MATTER OF COVIDIEN PLC

– and –

IN THE MATTER OF THE COMPANIES ACTS 1963 TO 2013

NOTICE IS HEREBY GIVEN that by an Order dated [—], 2014 made in the above matters, the Irish High Court has directed a meeting (the “Court Meeting”) to be convened of the holders of the Scheme Shares (as defined in the proposed scheme of arrangement which is included in the document of which this Notice forms a part) of Covidien plc (“Covidien”) for the purpose of considering and, if thought fit, approving (with or without modification) a scheme of arrangement pursuant to Section 201 of the Companies Act 1963 proposed to be made between Covidien and the holders of the Scheme Shares (and that such meeting will be held at [—], on [—] 2014, at [—] (local time)), at which place and time all holders of the Scheme Shares entitled to vote thereat are invited to attend.

A copy of the scheme of arrangement and a copy of the explanatory statement required to be furnished pursuant to Section 202 of the Companies Act 1963 are included in the document of which this Notice forms a part.

Scheme Shareholders (as defined in the proposed scheme of arrangement which is included in the document of which this Notice forms a part) may vote in person at the Court Meeting or they may appoint another person, whether a member of Covidien or not, as their proxy to attend, speak and vote in their stead. A form of proxy card for use at the Court Meeting is enclosed with this Notice. Completion and return of a proxy card will not preclude a Scheme Shareholder from attending and voting in person at the Court Meeting, or any adjournment thereof, if that shareholder wishes to do so. Any alteration to the form of proxy card must be initialed by the person who signs it.

It is requested that proxy cards duly completed and signed, together with any power of attorney, if any, under which it is signed, be lodged with Covidien’s inspector of election, Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, New York 11717, no later than 11:59 p.m. (Eastern Time in the U.S.) on the day before the Court Meeting but, if forms are not so lodged, they may be handed to the Chairman of the Court Meeting before the start of the Court Meeting and will still be valid.

Scheme Shareholders may also submit a proxy or proxies via the internet by accessing the inspector of election’s website (www.proxyvote.com) or vote by telephone (+1-800-690-6903) anytime up to 11:59 p.m. (Eastern Time in the U.S.) on the day immediately preceding the Court Meeting.

In the case of joint holders, the vote of the senior holder who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the vote(s) of the other joint holder(s) and, for this purpose, seniority will be determined by the order in which the names stand in the register of members of Covidien in respect of the joint holding.


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Entitlement to attend and vote at the meeting, or any adjournment thereof, and the number of votes which may be cast thereat, will be determined by reference to the register of members of Covidien as of 5:00 p.m. (Eastern Time in the U.S.) on [—] 2014, which is referred to as the “Voting Record Time.” In each case, changes to the register of members of Covidien after such time shall be disregarded for the purposes of being entitled to vote.

If a proxy card is properly executed and returned to Covidien’s inspector of election, it will be voted in the manner directed by the shareholder executing it, or if no directions are given, will be voted at the discretion of the Chairman of the Court Meeting or any other person duly appointed as proxy by the shareholder.

In the case of a corporation, a proxy card must be either under its Common Seal or under the hand of an officer or attorney, duly authorized.

By the said Order, the Irish High Court has appointed [—] or, failing him, [—], or, failing him, [—], to act as Chairman of the said meeting and has directed the Chairman to report the result thereof to the Irish High Court.

Subject to the approval of the resolution proposed at the meeting convened by this notice, the requisite resolutions to be proposed at the extraordinary general meeting of Covidien convened for [—], 2014 and the satisfaction of the other conditions to the completion of the scheme of arrangement, it is anticipated that the Irish High Court will order that the hearing of the petition to sanction the said scheme of arrangement will take place on [—], 2014.

Terms shall have the same meaning in this Notice as they have in the joint proxy statement/prospectus accompanying this Notice.

The said scheme of arrangement will be subject to the subsequent sanction of the Irish High Court.

Issued Shares and Total Voting Rights

The total number of issued Scheme Shares held by Scheme Shareholders as of the Voting Record Time (as defined in the proposed scheme of arrangement which is included in the document of which this Notice forms a part) entitled to vote at the Court Meeting is []. The resolution at the Court Meeting will be decided on a poll. Every holder of a Covidien ordinary share as of the Voting Record Time will have one vote for every Covidien ordinary share carrying voting rights of which he, she or it is the holder. A holder of a Covidien ordinary share as of the Voting Record Time (whether present in person or by proxy) who is entitled to more than one vote need not use all his, her or its votes or cast all his, her or its votes in the same way. To be passed, the resolution requires the approval of a majority in number of the shareholders of record of Covidien ordinary shares as of the Voting Record Time voting on the proposal representing at least 75 percent in value of the Scheme Shares held by such holders voting in person or by proxy at the Court Meeting.


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YOUR VOTE IS IMPORTANT

IT IS IMPORTANT THAT AS MANY VOTES AS POSSIBLE ARE CAST AT THE COURT MEETING (WHETHER IN PERSON OR BY PROXY) SO THAT THE IRISH HIGH COURT CAN BE SATISFIED THAT THERE IS A FAIR AND REASONABLE REPRESENTATION OF COVIDIEN SHAREHOLDER OPINION. TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARDS AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE POSTAGE PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE OR BY INTERNET OR TELEPHONE IN THE MANNER PROVIDED ABOVE. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON EVEN IF YOU HAVE APPOINTED A PROXY.

Dated [—], 2014

Arthur Cox

Earlsfort Centre

Earlsfort Terrace

Dublin 2

Ireland

Solicitors for Covidien


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LOGO

COVIDIEN PLC

20 On Hatch, Lower Hatch Street,

Dublin 2, Ireland

NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS

NOTICE OF EXTRAORDINARY GENERAL MEETING

OF COVIDIEN PLC

NOTICE IS HEREBY GIVEN that an EXTRAORDINARY GENERAL MEETING (“EGM”) of Covidien plc (the “Company” or “Covidien”) will be held at [—], on [—] 2014 at [—] (local time) (or, if later, as soon as possible after the conclusion or adjournment of the Court Meeting (as defined in the scheme of arrangement which is included in the document of which this Notice forms a part)) for the purpose of considering and, if thought fit, passing the following resolutions of which Resolutions 1, 3, 5 and 6 will be proposed as ordinary resolutions and Resolutions 2 and 4 as special resolutions:

 

1. Ordinary Resolution: To Approve the Scheme of Arrangement

That, subject to the approval by the requisite majorities of the Scheme of Arrangement (as defined in the document of which this notice forms a part) at the Court Meeting, the Scheme of Arrangement (a copy of which has been produced to this meeting and for the purposes of identification signed by the Chairman thereof) in its original form or with or subject to any modification, addition or condition approved or imposed by the Irish High Court be approved and the directors of Covidien be authorised to take all such action as they consider necessary or appropriate for carrying the Scheme of Arrangement into effect.

 

2. Special Resolution: Cancellation of Covidien Shares Pursuant to the Scheme of Arrangement

That, subject to the passing of Resolution 1 (above) and to the confirmation of the Irish High Court pursuant to Section 72 of the Companies Act 1963 and pursuant to Article 25 of Covidien’s articles of association, the issued capital of Covidien be reduced by cancelling and extinguishing all the Cancellation Shares (as defined in the Scheme of Arrangement) but without thereby reducing the authorised share capital of Covidien.

 

3. Ordinary Resolution: Directors’ Authority to Allot Securities and Application of Reserves

That, subject to the passing of Resolutions 1 and 2 above:

 

  (i) the directors of Covidien be and are hereby generally authorised pursuant to and in accordance with Section 20 of the Companies (Amendment) Act 1983 to give effect to this resolution and accordingly to effect the allotment of the New Covidien Shares (as defined in the Scheme of Arrangement) referred to in paragraph (ii) below; provided that (a) this authority shall expire on [—], (b) the maximum aggregate nominal amount of shares which may be allotted hereunder shall be an amount equal to nominal value of the Cancellation Shares and (c) this authority shall be without prejudice to any other authority under the said Section 20 previously granted before the date on which this resolution is passed; and

 

  (ii)

forthwith upon the reduction of capital referred to in Resolution 2 above taking effect, the reserve credit arising in the books of account of Covidien as a result of the cancellation of the Cancellation Shares be applied in paying up in full at par such number of new Covidien Shares as shall be equal to


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  the aggregate of the number of Cancellation Shares cancelled pursuant to Resolution 2 above, such new Covidien Shares to be allotted and issued to Medtronic Holdings Limited, incorporated in Ireland (company number 545333) (“New Medtronic”), and Makani II Limited, incorporated in Ireland (company number 545354) (“IrSub”), and/or their nominee(s) in the manner described in the Scheme of Arrangement, credited as fully paid up and free from all liens, charges, encumbrances, rights of pre-emption and any other third party rights of any nature whatsoever.

 

4. Special Resolution: Amendment to Articles

That, subject to the Scheme becoming effective, the articles of association of Covidien be amended by adding the following new Article [130]:

[130]. Scheme of Arrangement

 

  (a) In these articles, the “Scheme” means the scheme of arrangement dated [—], 2014 between the Company and the holders of the scheme shares (which comprise the ordinary shares of the Company that are cancelled or transferred under the Scheme) (the “Scheme Shares”) under Section 201 of the Companies Act 1963 in its original form or with or subject to any modification, addition or condition approved or imposed by the Irish High Court and expressions defined in the Scheme and (if not so defined) in the document containing the explanatory statement circulated with the Scheme under Section 202 of the Companies Act 1963 shall have the same meanings in this Article [130].

 

  (b) Notwithstanding any other provision of these articles, if the Company allots and issues any ordinary shares (other than to Medtronic plc, incorporated in Ireland (company number 545333 “New Medtronic”), or Makani II Limited, incorporated in Ireland (company number 545354) (“IrSub”), or their nominee(s) (holding on bare trust for New Medtronic and/or IrSub)) on or after the close of business on [—] and prior to [—] (Irish time) on the day before the date on which the Scheme becomes effective (the “Scheme Record Time”), such shares shall be allotted and issued subject to the terms of the Scheme and the holder or holders of those shares shall be bound by the Scheme accordingly.

 

  (c) Notwithstanding any other provision of these articles, if any new ordinary shares of the Company are allotted or issued to any person (a “new member”) (other than under the Scheme or to New Medtronic or any subsidiary undertaking of New Medtronic, including IrSub, or anyone acting on behalf of New Medtronic (holding on bare trust for New Medtronic and/or IrSub) at or after the Scheme Record Time, the new member shall, provided the Scheme has become effective, have such shares transferred immediately, free of all encumbrances, to New Medtronic or to IrSub and/or their nominee(s) (holding on bare trust for New Medtronic and/or IrSub) as New Medtronic and/or IrSub may direct in consideration of and conditional on the payment by New Medtronic and IrSub to the new member of the consideration to which the new member would have been entitled under the terms of the Scheme had such shares transferred to New Medtronic and IrSub hereunder been Scheme Shares, such new ordinary shares of the Company to rank pari passu in all respects with all other ordinary shares of the Company for the time being in issue and ranking for any dividends or distributions made, paid or declared thereon following the date on which the transfer of such new ordinary shares of the Company is executed.

 

  (d)

In order to give effect to any such transfer required by this article [130], the Company may appoint any person to execute and deliver a form of transfer on behalf of, or as attorney for, the new member in favor of New Medtronic or IrSub and/or their nominee(s) (holding on bare trust for New Medtronic and/or IrSub). Pending the registration of New Medtronic or IrSub as a holder of any share to be transferred under this article [130], the new member shall not be entitled to exercise any rights attaching to any such share unless so agreed by New Medtronic and IrSub and New Medtronic shall be irrevocably empowered to appoint a person nominated by the directors of New Medtronic to act as attorney on behalf of any holder of that share in accordance with any directions New Medtronic and/or IrSub gives in relation to any dealings with or disposal of that share (or any interest in it), exercising any rights attached to it or receiving any distribution or other benefit accruing or payable in respect of


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  it and any holders of that share must exercise all rights attaching to it in accordance with the directions of New Medtronic and/or IrSub. The Company shall not be obliged to issue a certificate to the new member for any such share.

 

5. Ordinary Resolution: Creation of Distributable Reserves of New Medtronic

That the reduction of the share premium account of New Medtronic resulting from the issuance of New Medtronic Shares (as defined in the Scheme of Arrangement) pursuant to (i) the Scheme of Arrangement and (ii) a subscription for New Medtronic Shares by Aviation Merger Sub, LLC prior to the merger, in order to create distributable reserves of New Medtronic be approved.

 

6. Ordinary Resolution (non-binding, advisory): Approval of Specified Compensatory Arrangement between Covidien and its Named Executive Officers

That, on a non-binding, advisory basis, specified compensatory arrangements between Covidien and its named executive officers relating to the transaction (as more particularly described in the section of the accompanying joint proxy statement/prospectus captioned “Interests of Certain Persons in the Transaction—Covidien”) be approved.

 

By order of the Board    Covidien plc
Company Secretary    20 On Hatch, Lower Hatch Street,
   Dublin 2, Ireland

John W. Kapples

Dated: [—], 2014

Note:

1. A member is entitled to attend and vote at the EGM or is entitled to appoint a proxy to attend, speak and vote in his or her place. A proxy need not be a member of Covidien.


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE TRANSACTION AND THE SPECIAL MEETINGS

     1   

SUMMARY

     12   

Information about the Companies

     12   

The Transaction

     14   

Structure of the Transaction

     14   

Transaction Consideration to Medtronic Shareholders and Scheme Consideration to Covidien Shareholders

     15   

Treatment of Medtronic Stock Options and Other Medtronic Equity-Based Awards

     15   

Treatment of Covidien Stock Options and Other Covidien Equity-Based Awards

     15   

Comparative Per Share Market Price and Dividend Information

     16   

Recommendation of the Medtronic Board of Directors and Medtronic’s Reasons for the
Transaction

     17   

Opinion of Medtronic’s Financial Advisor

     17   

Recommendation of the Covidien Board of Directors and Covidien’s Reasons for the Transaction

     18   

Opinion of Covidien’s Financial Advisor

     19   

Interests of Certain Persons in the Transaction

     19   

Other Compensation Matters

     20   

Board of Directors and Management after the Transaction

     20   

Material Tax Consequences of the Proposed Transaction

     20   

Legal Proceedings Regarding the Transaction

     22   

No Dissenters’ Rights

     22   

Regulatory Approvals Required

     23   

Listing of New Medtronic Ordinary Shares on Stock Exchange

     23   

Conditions to the Completion of the Acquisition and the Merger

     23   

Termination of the Transaction Agreement

     25   

Expenses Reimbursement Agreement

     26   

Financing Relating to the Transaction

     26   

Accounting Treatment of the Transaction

     27   

Comparison of the Rights of Holders of Medtronic Common Shares and New Medtronic Ordinary Shares

     28   

Comparison of the Rights of Holders of Covidien Ordinary Shares and New Medtronic Ordinary Shares

     28   

RISK FACTORS

     29   

Risks Relating to the Transaction

     29   

Risks Relating to the Businesses of the Combined Company

     32   

Risks Relating to Medtronic’s Business

     39   

SELECTED HISTORICAL FINANCIAL DATA OF MEDTRONIC

     51   

 

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TABLE OF CONTENTS—(continued)

 

     Page  

SELECTED HISTORICAL FINANCIAL DATA OF COVIDIEN

     52   

SELECTED UNAUDITED PRO FORMA FINANCIAL DATA

     54   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     55   

PART 1—THE TRANSACTION AND THE SPECIAL MEETINGS

     58   

THE SPECIAL MEETING OF MEDTRONIC’S SHAREHOLDERS

     58   

Overview

     58   

Date, Time and Place of the Medtronic Special Meeting

     58   

Attendance

     58   

Proposals

     58   

Record Date; Outstanding Shares; Shares Entitled to Vote

     58   

Quorum

     59   

Vote Required; Recommendation of Medtronic’s Board of Directors

     59   

Share Ownership and Voting by Medtronic’s Officers and Directors

     61   

Voting Your Shares

     61   

Voting Shares Held in Street Name

     61   

Revoking Your Proxy

     62   

Costs of Solicitation

     62   

Other Business

     62   

Assistance

     62   

THE SPECIAL MEETINGS OF COVIDIEN’S SHAREHOLDERS

     63   

Overview

     63   

Date, Time and Place of the Covidien Special Meetings

     63   

Attendance

     63   

Proposals

     63   

Record Date; Outstanding Ordinary Shares; Ordinary Shares Entitled to Vote

     64   

Quorum

     64   

Ordinary Share Ownership and Voting by Covidien’s Directors and Officers

     64   

Vote Required; Recommendation of Covidien’s Board of Directors

     65   

Voting Your Ordinary Shares

     66   

Voting Ordinary Shares Held in Street Name

     67   

Revoking Your Proxy

     67   

Costs of Solicitation

     68   

Other Business

     68   

Adjournment; Postponement

     68   

Assistance

     68   

 

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TABLE OF CONTENTS

(continued)

 

     Page  

THE TRANSACTION

     69   

The Merger and the Acquisition

     69   

Background of the Transaction

     69   

Recommendation of the Medtronic Board of Directors and Medtronic’s Reasons for the Transaction

     77   

Recommendation of the Covidien Board of Directors and Covidien’s Reasons for the Transaction

     81   

Opinion of Medtronic’s Financial Advisor

     85   

Opinion of Covidien’s Financial Advisor

     95   

Medtronic Unaudited Prospective Financial Information

     102   

Covidien Unaudited Prospective Financial Information

     104   

Financing

     106   

Transaction-Related Costs

     107   

Interests of Certain Persons in the Transaction

     107   

Quantification of Payments and Benefits to Medtronic’s Named Executive Officers

     108   

Medtronic’s Intentions Regarding Medtronic and Covidien

     114   

Board of Directors and Management after the Transaction

     114   

Compensation of New Medtronic’s Executive Officers

     115   

Compensation of New Medtronic’s Directors

     115   

Regulatory Approvals Required

     116   

Payment of Consideration

     116   

NO DISSENTERS’ RIGHTS

     117   

ACCOUNTING TREATMENT OF THE TRANSACTION

     117   

MATERIAL TAX CONSEQUENCES OF THE PROPOSED TRANSACTION

     118   

U.S. Federal Income Tax Considerations

     118   

U.S. Anti-Inversion Rules

     119   

U.S. Federal Income Tax Treatment of the Proposed Transaction

     120   

Irish Tax Considerations

     128   

LISTING OF NEW MEDTRONIC ORDINARY SHARES ON STOCK EXCHANGE

     134   

DELISTING AND DEREGISTRATION OF MEDTRONIC COMMON SHARES

     134   

DELISTING AND DEREGISTRATION OF COVIDIEN ORDINARY SHARES

     134   

LEGAL PROCEEDINGS REGARDING THE TRANSACTION

     134   

INFORMATION ABOUT THE COMPANIES

     135   

Medtronic

     135   

Covidien

     135   

New Medtronic

     135   

IrSub

     136   

U.S. AcquisitionCo

     136   

 

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TABLE OF CONTENTS—(continued)

 

     Page  

MergerSub

     136   

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     137   

MEDTRONIC MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     152   

MEDTRONIC’S BUSINESS

     184   

DIRECTORS OF MEDTRONIC

     207   

MANAGEMENT OF MEDTRONIC

     209   

COMPENSATION OF MEDTRONIC’S NON-EMPLOYEE DIRECTORS

     211   

MEDTRONIC’S COMPENSATION DISCUSSION AND ANALYSIS

     214   

MEDTRONIC’S 2014 EMPLOYEES STOCK PURCHASE PLAN

     253   

THE TRANSACTION AGREEMENT

     257   

Structure of the Transaction

     257   

Closing of the Transaction

     257   

Scheme Consideration to Covidien Shareholders

     257   

Merger Consideration to Medtronic Shareholders

     257   

Treatment of Covidien Options and Covidien Share Awards

     258   

Treatment of Medtronic Options and Other Medtronic Equity Awards

     258   

Exchange of Covidien Ordinary Shares

     259   

Exchange of Medtronic Shares

     259   

Representations and Warranties

     259   

Covenants and Agreements

     262   

Conditions to the Completion of the Acquisition and the Merger

     271   

Survival of Representations and Warranties

     273   

Termination

     273   

Expenses

     274   

Reverse Termination Payment

     274   

Amendment and Waiver

     274   

Specific Performance; Third-Party Beneficiaries

     275   

EXPENSES REIMBURSEMENT AGREEMENT

     276   

FINANCING RELATING TO THE TRANSACTION

     278   

CREATION OF DISTRIBUTABLE RESERVES OF NEW MEDTRONIC

     280   

MEDTRONIC SHAREHOLDER VOTE ON SPECIFIED COMPENSATORY ARRANGEMENTS

     281   

Advisory Vote on Golden Parachute Compensation

     281   

Required Vote

     281   

Recommendation

     281   

COVIDIEN SHAREHOLDER VOTE ON SPECIFIED COMPENSATORY ARRANGEMENTS

     282   

Advisory Vote on Golden Parachute Compensation

     282   

 

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TABLE OF CONTENTS—(continued)

 

     Page  

Required Vote

     282   

Recommendation

     282   

COMPARATIVE PER SHARE DATA

     283   

COMPARATIVE PER SHARE MARKET PRICE DATA AND DIVIDEND INFORMATION

     285   

DESCRIPTION OF NEW MEDTRONIC ORDINARY SHARES

     286   

Capital Structure

     286   

Preemption Rights, Share Warrants and Share Options

     287   

Dividends

     288   

Share Repurchases, Redemptions and Conversions

     289   

Lien on Shares, Calls on Shares and Forfeiture of Shares

     290   

Consolidation and Division; Subdivision

     290   

Reduction of Share Capital

     291   

Annual Meetings of Shareholders

     291   

Extraordinary General Meetings of Shareholders

     291   

Quorum for General Meetings

     292   

Voting

     292   

Variation of Rights Attaching to a Class or Series of Shares

     293   

Inspection of Books and Records

     293   

Acquisitions

     293   

Appraisal Rights

     293   

Disclosure of Interests in Shares

     294   

Anti-Takeover Provisions

     295   

Corporate Governance

     298   

Legal Name; Formation; Fiscal Year; Registered Office

     298   

Appointment of Directors

     298   

Removal of Directors

     299   

Duration; Dissolution; Rights upon Liquidation

     299   

Uncertificated Shares

     299   

Stock Exchange Listing

     299   

No Sinking Fund

     299   

No Liability for Further Calls or Assessments

     300   

Transfer and Registration of Shares

     300   

COMPARISON OF THE RIGHTS OF HOLDERS OF MEDTRONIC COMMON SHARES AND NEW MEDTRONIC ORDINARY SHARES

     301   

COMPARISON OF THE RIGHTS OF HOLDERS OF COVIDIEN ORDINARY SHARES AND NEW MEDTRONIC ORDINARY SHARES

     333   

 

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TABLE OF CONTENTS—(continued)

 

     Page  

SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS OF MEDTRONIC

     359   

LEGAL MATTERS

     360   

EXPERTS

     361   

ENFORCEABILITY OF CIVIL LIABILITIES

     362   

FUTURE SHAREHOLDER PROPOSALS

     363   

WHERE YOU CAN FIND MORE INFORMATION

     365   

MEDTRONIC/COVIDIEN S-4—EXCERPTS

     368   

PART 2—EXPLANATORY STATEMENT

     368   

Introduction

     368   

The Acquisition

     368   

The Conditions

     369   

Consents and Meetings

     370   

Structure of Scheme

     373   

Opinion of Financial Advisor to Covidien

     373   

Board, Management and Employees

     374   

Covidien Equity Award Holders

     375   

The Covidien Directors & Executive Officers and the Effect of the Scheme on Their Interests

     375   

Taxation

     380   

Settlement, Listing and Dealings

     382   

Overseas Shareholders

     383   

Action to Be Taken

     383   

Further Information

     383   

PART 3—THE SCHEME OF ARRANGEMENT

     384   

PART 4—ADDITIONAL INFORMATION

     390   

Responsibility

     390   

Directors and Registered Office

     390   

Certain Financial Effects of the Scheme

     390   

Market Quotations

     391   

Shareholders and Dealings

     391   

Material Contracts

     398   

Directors and Service Contracts

     399   

Material Changes

     399   

Consents

     399   

Sources and Bases of Information

     399   

Concert Parties

     401   

 

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TABLE OF CONTENTS—(continued)

 

     Page  

Other Information

     402   

Documents Available For Inspection

     402   

MERGER BENEFIT STATEMENT

     404   

CONSOLIDATED FINANCIAL STATEMENTS OF MEDTRONIC, INC.

     F-1   

ANNEX A: TRANSACTION AGREEMENT

     A-1   

ANNEX B: CONDITIONS OF THE ACQUISITION AND THE SCHEME

     B-1   

ANNEX C: EXPENSES REIMBURSEMENT AGREEMENT

     C-1   

ANNEX D: FORM OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF NEW MEDTRONIC

     D-1   

ANNEX E: OPINION OF MEDTRONIC’S FINANCIAL ADVISOR

     E-1   

ANNEX F: OPINION OF COVIDIEN’S FINANCIAL ADVISOR

     F-1   

ANNEX G: LIST OF RELEVANT TERRITORIES FOR THE PURPOSES OF IRISH DIVIDEND WITHHOLDING TAX

     G-1   

 

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTION AND THE SPECIAL MEETINGS

The following questions and answers are intended to address briefly some commonly asked questions regarding the transaction and the special meetings. These questions and answers only highlight some of the information contained in this joint proxy statement/prospectus. They may not contain all the information that is important to you. You should read carefully this entire joint proxy statement/prospectus, including the Annexes and the documents incorporated by reference into this joint proxy statement/prospectus, to understand fully the proposed transactions and the voting procedures for the special meetings. See Where You Can Find More Information beginning on page []. Unless otherwise specified, all references in this joint proxy statement/prospectus to “Medtronic” refer to Medtronic, Inc., a Minnesota corporation; all references in this joint proxy statement/prospectus to “Covidien” refer to Covidien public limited company, a public limited company incorporated in Ireland; all references in this joint proxy statement/prospectus to “New Medtronic” refer to Medtronic Holdings Limited (formerly known as Kalani I Limited), a private limited company incorporated in Ireland that will be re-registered as a public limited company and renamed Medtronic plc at or prior to the completion of the transaction; all references in this joint proxy statement/prospectus to “IrSub” refer to Makani II Limited, a private limited company incorporated in Ireland; all references in this joint proxy statement/prospectus to “U.S. AcquisitionCo” refer to Aviation Acquisition Co., Inc., a Minnesota corporation; all references in this joint proxy statement/prospectus to “MergerSub” refer to Aviation Merger Sub, LLC, a Minnesota limited liability company; all references to the “Transaction Agreement” refer to the Transaction Agreement, dated as of June 15, 2014, by and among Medtronic, Covidien, New Medtronic, IrSub, U.S. AcquisitionCo and MergerSub, a copy of which is included as Annex A to this joint proxy statement/prospectus; all references to the “conditions appendix” refer to the conditions to the acquisition and the scheme, a copy of which is included as Annex B to this joint proxy statement/prospectus; and all references to the “expenses reimbursement agreement” refer to the Expenses Reimbursement Agreement, dated as of June 15, 2014, by and between Medtronic and Covidien, which is included as Annex C to this joint proxy statement/prospectus. Unless otherwise indicated, all references to “dollars” or “$” in this joint proxy statement/prospectus are references to U.S. dollars. If you are in any doubt about this transaction you should consult an independent financial advisor who, if you are taking advice in Ireland, is authorized or exempted by the Investment Intermediaries Act 1995, or the European Communities (Markets in Financial Instruments) Regulations (No’s 1 to 3) 2007 (as amended).

 

Q: Why am I receiving this joint proxy statement/prospectus?

 

A: Medtronic, Covidien, New Medtronic, IrSub, U.S. AcquisitionCo and MergerSub have entered into the Transaction Agreement, pursuant to which New Medtronic will acquire Covidien by means of a “scheme of arrangement,” or “scheme,” which is referred to in this joint proxy statement/prospectus as the “acquisition,” and, immediately following and conditioned on the consummation of the acquisition, MergerSub will be merged with and into Medtronic, which is referred to in this joint proxy statement/prospectus as the “merger,” with Medtronic surviving the merger as a wholly owned indirect subsidiary of New Medtronic.

Medtronic is holding a special meeting of shareholders in order to obtain shareholder approval to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic, as described in this joint proxy statement/prospectus.

Covidien is convening a special Court-ordered meeting of its shareholders in order to obtain shareholder approval of the scheme of arrangement, which is referred to herein as the “special Court-ordered meeting.” If Covidien obtains the necessary shareholder approval of the scheme of arrangement, as soon as possible after the conclusion or adjournment of the special Court-ordered meeting Covidien will convene an extraordinary general meeting, or the “EGM,” in order to obtain shareholder approval of the resolutions necessary to implement the scheme of arrangement and related resolutions. The Covidien special Court-ordered meeting and the EGM are referred to herein collectively as the Covidien “special meetings.”

 

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We will be unable to complete the merger and the acquisition unless the requisite Medtronic and Covidien shareholder approvals described above are obtained at the respective special meetings. However, as described below, the merger and the acquisition are not conditioned on approval of certain additional matters being presented at the Medtronic special meeting and the Covidien EGM.

The acquisition, the merger and the other transactions contemplated by the Transaction Agreement to occur at completion are referred to collectively in this joint proxy statement/prospectus as the “transaction.”

We have included in this joint proxy statement/prospectus important information about the merger, the acquisition, the Transaction Agreement (a copy of which is attached as Annex A), the conditions appendix (a copy of which is attached as Annex B), the expenses reimbursement agreement (a copy of which is attached as Annex C), the Medtronic special meeting and the Covidien special meetings. You should read this information carefully and in its entirety. If you are a record holder, the enclosed voting materials allow you to vote your shares without attending the applicable special meeting by granting a proxy or voting your shares by mail, telephone or over the internet. If you hold your shares through a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee in order to instruct them how to vote such shares.

 

Q: When and where will the Medtronic and Covidien special meetings be held?

 

A: The Medtronic special meeting will be held at [—], on [—], 2014, at [—], local time.

The Covidien special Court-ordered meeting will be convened at [—], on [—], 2014, at [—], local time.

The Covidien EGM will be convened at [—], on [—], 2014, at [—], local time or, if later, as soon as possible after the conclusion of the Covidien special Court-ordered meeting.

 

Q: What will the Medtronic shareholders receive as consideration in the transaction?

 

A: Upon the effective time of the merger, each Medtronic common share issued and outstanding immediately prior to the merger will be cancelled and will automatically be converted into the right to receive one New Medtronic ordinary share from or at the direction of MergerSub. The one-for-one exchange ratio is fixed, and, as a result, the number of New Medtronic ordinary shares received by the Medtronic shareholders in the transaction will not fluctuate up or down based on the market price of the Medtronic common shares or the Covidien ordinary shares prior to the transaction. It is expected that the New Medtronic ordinary shares will be listed on the NYSE under the symbol “MDT.” Following the consummation of the transaction, the Medtronic common shares will be delisted from the NYSE.

Since Irish law does not recognize fractional shares held of record, New Medtronic will not issue any fractions of New Medtronic ordinary shares to Medtronic shareholders in the transaction. Instead, the total number of New Medtronic ordinary shares that any Medtronic shareholder would have been entitled to receive will be rounded down to the nearest whole number and all entitlements to fractional New Medtronic ordinary shares will be aggregated and sold by the exchange agent, with any sale proceeds being distributed in cash pro rata to the Medtronic shareholders whose fractional entitlements have been sold.

 

Q: What will the Covidien shareholders receive as consideration in the transaction?

 

A: Upon the completion of the transaction, the holder of each Covidien ordinary share issued and outstanding immediately prior to completion of the acquisition (other than Medtronic or any Medtronic affiliate) will be entitled to receive (i) $35.19 in cash and (ii) 0.956 of a New Medtronic ordinary share, which, collectively, is referred to in this joint proxy statement/prospectus as the “scheme consideration.” The exchange ratio is fixed, and, as a result, neither the cash amount nor the number of New Medtronic ordinary shares received by the Covidien shareholders in the transaction will fluctuate up or down based on the market price of the Medtronic common shares or the Covidien ordinary shares prior to the transaction.

 

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It is expected that the New Medtronic ordinary shares will be listed on the NYSE under the symbol “MDT.” Following the consummation of the transaction, Covidien ordinary shares will be delisted from the NYSE.

Since Irish law does not recognize fractional shares held of record, New Medtronic will not issue any fractions of New Medtronic ordinary shares to Covidien shareholders in the transaction. Instead, the total number of New Medtronic ordinary shares that any Covidien shareholder would have been entitled to receive will be rounded down to the nearest whole number and all entitlements to fractional New Medtronic ordinary shares will be aggregated and sold by the exchange agent, with any sale proceeds being distributed in cash pro rata to the Covidien shareholders whose fractional entitlements have been sold.

 

Q: What proposals are being voted on at the Medtronic special meeting and what shareholder vote is required to approve those proposals?

 

A: (1) Proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic: The affirmative vote of holders of a majority of the Medtronic common shares outstanding on the record date.

Abstentions, failures to vote and broker non-votes will have the same effect as a vote against proposal 1.

(2) Proposal to reduce the share premium account of New Medtronic to allow the creation of distributable reserves: The affirmative vote of holders of a majority of the Medtronic common shares represented, in person or by proxy that authorizes such shares to be voted on such proposal, at the special meeting.

(3) Proposal to consider and vote upon, on a non-binding, advisory basis, specified compensatory arrangements between Medtronic and its named executive officers: The affirmative vote of holders of a majority of the Medtronic common shares represented, in person or by proxy that authorizes such shares to be voted on such proposal, at the special meeting. This proposal is advisory and therefore not binding on the Medtronic board of directors.

(4) Proposal to adjourn the Medtronic special meeting to another time or place if necessary or appropriate (i) to solicit additional proxies if there are insufficient votes at the time of the Medtronic special meeting to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic, (ii) to provide to the Medtronic shareholders in advance of the special meeting any supplement or amendment to the joint proxy statement/prospectus or (iii) to disseminate any other information which is material to the Medtronic shareholders voting at the special meeting, referred to as the “Medtronic adjournment proposal”: The affirmative vote of holders of a majority of the Medtronic common shares represented, in person or by proxy that authorizes such shares to be voted on such proposal, at the special meeting.

With respect to each of proposals 2, 3 and 4, abstentions and failures to vote shares that are represented, in person or by proxy authorized to vote on the particular proposal, at the special meeting will have the same effect as a vote against such proposal. Broker non-votes will have no effect on proposals 2, 3 or 4.

The merger and the acquisition are not conditioned on approval of proposals 2, 3 or 4.

As of the Medtronic record date, directors and executive officers of Medtronic and their affiliates owned and were entitled to vote [—] Medtronic common shares, representing approximately [—]% percent of the Medtronic common shares outstanding on that date. It is expected that the Medtronic directors and executive officers who are shareholders of Medtronic will vote “FOR” the proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic, “FOR” the proposal to create distributable reserves of New Medtronic, “FOR” the proposal to approve, on a non-binding, advisory basis, specified compensatory arrangements between Medtronic and its named executive officers relating to the transaction and “FOR” the Medtronic adjournment proposal, although none of them has entered into any agreement requiring them to do so.

 

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Q: What proposals are being voted on at the Covidien special meetings and what shareholder vote is required to approve those proposals?

 

A: Covidien Special Court-Ordered Meeting

Covidien shareholders are being asked to vote on a proposal to approve the scheme at both the Covidien special Court-ordered meeting and at the Covidien EGM. The vote required for such proposal is different at each of the meetings, however. As set out in full under the section entitled “Part 2—Explanatory Statement—Consents and Meetings,” the approval required at the special Court-ordered meeting is a majority in number of the Covidien shareholders of record casting votes on the proposal representing three-fourths (75 percent) or more in value of the Covidien ordinary shares held by such holders, present and voting either in person or by proxy.

Because the vote required to approve the proposal at the Covidien special Court-ordered meeting is based on votes properly cast at the meeting, and because abstentions and broker non-votes are not considered votes properly cast, abstentions and broker non-votes, along with failures to vote, will have no effect on such proposal.

The merger and the acquisition are conditioned on approval of the scheme at the Covidien special Court-ordered meeting.

Covidien Extraordinary General Meeting

Set forth below is a table summarizing certain information with respect to the Resolutions to be voted on at the EGM:

 

EGM
Resolution #

  

Resolution

   Ordinary or
Special
Resolution?
   Transaction
Conditioned on
Approval of
Resolution?
1    Approve the scheme of arrangement and authorize the directors of Covidien to take all such actions as they consider necessary or appropriate for carrying the scheme of arrangement into effect.    Ordinary    Yes
2    Approve the cancellation of any Covidien ordinary shares in issue before [—], Irish time, on the day before the Irish High Court hearing to sanction the scheme.    Special    Yes
3    Authorize the directors of Covidien to allot and issue new Covidien shares, fully paid up, to New Medtronic and IrSub in connection with effecting the scheme.    Ordinary    Yes
4    Amend the articles of association of Covidien so that any ordinary shares of Covidien that are issued at or after [—], Irish time, on the last business day before the scheme becomes effective are acquired by New Medtronic and/or IrSub for the scheme consideration.    Special    Yes
5    Approve the reduction of the share premium account of New Medtronic resulting from (i) the issuance of New Medtronic shares pursuant to the scheme and (ii) a subscription for New Medtronic shares by MergerSub prior to the merger, in order to create distributable reserves of New Medtronic.    Ordinary    No
6    Approve, on a non-binding, advisory basis, specified compensatory arrangements between Covidien and its named executive officers relating to the transaction.    Ordinary    No

At the Covidien EGM, the requisite approval of each of the EGM resolutions depends on whether it is an “ordinary resolution” (EGM resolutions 1, 3, 5 and 6), which requires the approval of the holders of at least

 

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a majority of the votes cast by the holders of Covidien ordinary shares present and voting, either in person or by proxy, or a “special resolution” (EGM resolutions 2 and 4), which requires the approval of the holders of at least 75 percent of the votes cast by the holders of Covidien ordinary shares present and voting, either in person or by proxy.

For all the EGM resolutions, because the votes required to approve such resolutions are based on votes properly cast at the meeting, and because abstentions and broker non-votes are not considered votes properly cast, abstentions and broker non-votes, along with failures to vote, will have no effect on the EGM resolutions.

As of the Covidien record date, the Covidien directors and executive officers had the right to vote approximately [—]% of the Covidien ordinary shares then outstanding and entitled to vote at the special Court-ordered meeting and the EGM. It is expected that Covidien’s directors and executive officers will vote “FOR” each of the proposals at the special Court-ordered meeting and at the EGM, although none of them have entered into any agreement requiring them to do so.

 

Q: Why are there two Covidien special meetings?

 

A: Irish law requires that two separate shareholder meetings be held, the special Court-ordered meeting and the EGM. Both meetings are necessary to cause the scheme of arrangement to become effective. At the special Court-ordered meeting, Covidien shareholders (other than Medtronic or any of its affiliates) will be asked to approve the scheme. At the EGM, Covidien shareholders (other than Medtronic or any of its affiliates) will also be asked to approve the scheme and related matters. For more detail on these matters, see “The Special Meetings of Covidien’s Shareholders.”

 

Q: What constitutes a quorum?

 

A: Medtronic: A majority of the outstanding Medtronic common shares, present in person or by proxy authorized to vote at the special meeting, will constitute a quorum for the transaction of business at the Medtronic special meeting. Medtronic’s inspector of election intends to treat as “present” for these purposes shareholders who have submitted properly executed or transmitted proxies that are marked “abstain.” The inspector will also treat as “present” shares held in “street name” by brokers that are voted on at least one proposal to come before the meeting.

Covidien: The holders of Covidien ordinary shares outstanding, present in person or by proxy, entitling them to exercise a majority of the voting power of Covidien on the Covidien record date will constitute a quorum for a meeting. Covidien’s inspector of election intends to treat as “present” for these purposes shareholders who have submitted properly executed or transmitted proxies that are marked “abstain.” The inspector will also treat as “present” shares held in “street name” by brokers that are voted on at least one proposal to come before the meeting.

 

Q: Why am I being asked to approve the distributable reserves proposal?

 

A: Under Irish law, dividends may be paid (and share repurchases and redemptions must generally be funded) only out of “distributable reserves,” which New Medtronic will not have immediately following the completion of the transaction. Please see “Creation of Distributable Reserves of New Medtronic” beginning on page []. Shareholders of Medtronic and Covidien are therefore being asked at their respective special meetings to approve the creation of distributable reserves of New Medtronic (through the reduction of the share premium account of New Medtronic) in order to facilitate New Medtronic’s ability to pay dividends (and repurchase or redeem shares) after the transaction.

The approval of the distributable reserves proposal is not a condition to the consummation of the transaction. Accordingly, if shareholders of Medtronic approve the proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum of articles of association of

 

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New Medtronic, and shareholders of Covidien approve the scheme and resolutions 1, 2, 3 and 4 to be proposed at the EGM, but shareholders of Medtronic and/or Covidien do not approve the distributable reserves proposal, and the transaction is consummated, New Medtronic may not have sufficient distributable reserves to pay dividends (or to repurchase or redeem shares) following the transaction unless and until New Medtronic otherwise accumulates distributable reserves. In addition, the creation of distributable reserves of New Medtronic requires the approval of the Irish High Court. Although New Medtronic is not aware of any reason why the Irish High Court would not approve the creation of distributable reserves, the issuance of the required order is a matter for the discretion of the Irish High Court. Please see “Risk Factors” beginning on page [] and “Creation of Distributable Reserves of New Medtronic” beginning on page [].

 

Q: What are the recommendations of the Medtronic and Covidien boards of directors regarding the proposals being put to a vote at their respective special meetings?

 

A: Medtronic: The Medtronic board of directors has unanimously approved the Transaction Agreement and determined that the entry into the Transaction Agreement and the merger are fair to and in the best interests of Medtronic and its shareholders.

The Medtronic board of directors unanimously recommends that Medtronic shareholders vote:

 

  “FOR” the proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic;

 

  “FOR” the proposal to reduce the share premium account of New Medtronic to allow the creation of distributable reserves;

 

  “FOR” the approval, on a non-binding, advisory basis, of specified compensatory arrangements between Medtronic and its named executive officers; and

 

  “FOR” the Medtronic adjournment proposal.

See “The Transaction—Recommendation of the Medtronic Board of Directors and Medtronic’s Reasons for the Transaction” beginning on page [].

In considering the recommendation of the Medtronic board of directors, you should be aware that directors and executive officers of Medtronic have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders. See “The Transaction—Interests of Certain Persons in the Transaction—Medtronic.”

Covidien: The Covidien board of directors has unanimously approved the Transaction Agreement and determined that the Transaction Agreement and the transactions contemplated by the Transaction Agreement, including the scheme, are fair to and in the best interests of Covidien and its shareholders and that the terms of the scheme are fair and reasonable.

The Covidien board of directors unanimously recommends that Covidien shareholders vote:

 

  “FOR” the scheme of arrangement at the special Court-ordered meeting;

 

  “FOR” the scheme of arrangement at the EGM;

 

  “FOR” the cancellation of any Covidien ordinary shares in issue before [—], Irish time, on the day before the Irish High Court hearing to sanction the scheme;

 

  “FOR” the authorization of the directors of Covidien to allot and issue new Covidien shares, fully paid up, to New Medtronic and IrSub in connection with effecting the scheme;

 

  “FOR” amendment of the articles of association of Covidien so that any ordinary shares of Covidien that are issued at or after [—], Irish time on the last business day before the scheme becomes effective are acquired by New Medtronic and/or IrSub for the scheme consideration;

 

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  “FOR” the reduction of the share premium account of New Medtronic resulting from (i) the issuance of New Medtronic shares pursuant to the scheme and (ii) a subscription for New Medtronic shares by MergerSub prior to the merger, in order to create distributable reserves of New Medtronic; and

 

  “FOR” the approval, on a non-binding, advisory basis of specified compensatory arrangements between Covidien and its named executive officers.

See “The Transaction—Recommendation of the Covidien Board of Directors and Covidien’s Reasons for the Transaction” beginning on page [].

In considering the recommendation of the Covidien board of directors, you should be aware that directors and executive officers of Covidien have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders. See “The Transaction—Interests of Certain Persons in the Transaction—Covidien.”

 

Q: When is the transaction expected to be completed?

 

A: As of the date of this joint proxy statement/prospectus, the transaction is expected to be completed in the fourth calendar quarter of 2014 or early 2015. However, no assurance can be provided as to when or if the transaction will be completed. The required vote of Medtronic and Covidien shareholders to adopt the required shareholder proposals at their respective special meetings, as well as the necessary regulatory consents and approvals, must first be obtained and other conditions specified in the conditions appendix must be satisfied or, to the extent applicable, waived.

 

Q: Why will the place of incorporation of New Medtronic be Ireland?

 

A: Medtronic decided that New Medtronic would be incorporated in Ireland for the following reasons:

 

  Incorporating New Medtronic in Ireland will result in significantly enhanced global cash management flexibility and associated financial benefits to the combined enterprise compared to incorporation in the United States. These benefits include increased global liquidity as a result of access to cash generated by Covidien’s non-U.S. subsidiaries, which will continue to be free of U.S. tax so long as New Medtronic is not taxed as a U.S. corporation.

 

  Covidien is already an Irish-domiciled company, and over time has built productive relationships with the relevant Irish regulatory authorities and the Irish government generally. Both Medtronic and Covidien have substantial operations in Ireland and an infrastructure to provide the necessary support for the parent company;

 

  Ireland is a beneficial location considering Medtronic’s and Covidien’s presence in markets outside the United States, particularly in Europe; and

 

  Ireland enjoys strong relationships as a member of the European Union, and has a long history of international investment and a good network of commercial, tax, and other treaties with the United States, the European Union and many other countries where both Medtronic and Covidien have major operations.

 

Q: Who is entitled to vote?

 

A: Medtronic: The board of directors of Medtronic has fixed a record date of [—], 2014 as the Medtronic record date. If you were a Medtronic shareholder of record as of 5:00 p.m. (Eastern Time in the U.S.) on the Medtronic record date, you are entitled to receive notice of and to vote at the Medtronic special meeting and any adjournments thereof.

Covidien: The board of directors of Covidien has fixed a record date of [—], 2014 as the Covidien record date. If you were a Covidien shareholder of record as of 5:00 p.m. (Eastern Time in the U.S.) on the Covidien record date, you are entitled to receive notice of and to vote at the Covidien special meetings and any adjournments thereof.

 

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Q: What if I sell my Medtronic common shares before the Medtronic special meeting or my Covidien ordinary shares before the Covidien special meetings?

Medtronic: If you transfer your shares after the Medtronic record date but before the Medtronic special meeting, you will retain your right to vote at the Medtronic special meeting, but will have transferred the right to receive New Medtronic ordinary shares pursuant to the transaction. In order to receive the New Medtronic ordinary shares, you must hold your shares through completion of the transaction.

Covidien: If you transfer your shares after the Covidien record date but before the Covidien special meetings, you will retain your right to vote at the Covidien special meetings, but will have transferred the right to receive the scheme consideration. In order to receive the scheme consideration, you must hold your shares through completion of the transaction.

 

Q: How do I vote?

 

A: Medtronic: If you are a Medtronic shareholder of record, you may vote your shares at the Medtronic special meeting in one of the following ways:

 

  by mailing your completed and signed proxy card in the enclosed return envelope;

 

  by voting by telephone or over the internet as instructed on the enclosed proxy card; or

 

  by attending the Medtronic special meeting and voting in person.

To vote in person, you must bring proof of ownership as of the Medtronic record date and valid picture identification.

 

  If you are a Medtronic shareholder of record, the shares listed on your proxy card will include the following shares, if applicable:

 

    shares held in the Medtronic, Inc. SIP;

 

    shares held in the Medtronic Puerto Rico Employees’ SIP; and

 

    shares held in a book-entry account at Wells Fargo Bank N.A., Medtronic’s transfer agent.

If you hold your shares through a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee in order to instruct them how to vote such shares.

Covidien: If you are a Covidien shareholder of record, you may vote your shares at the Covidien special meetings in one of the following ways:

 

  by mailing your applicable completed and signed proxy cards in the enclosed return envelope;

 

  by voting by telephone or over the internet as instructed on the applicable enclosed proxy card; or

 

  by attending the applicable Covidien special meeting and voting in person.

To vote in person, you must bring proof of ownership as of the Covidien record date and valid picture identification.

 

  If you are a Covidien shareholder of record, the shares listed on your proxy cards will include the following shares, if applicable:

 

    shares issued under the Covidien Savings Related Share Plan; and

 

    shares held in a book-entry account at Computershare Trust Company, N.A., Covidien’s transfer agent.

If you hold your shares through a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee in order to instruct them how to vote such shares.

 

Q: How do I vote shares acquired through an employee program?

 

A: Medtronic: If you are a Medtronic shareholder of record, the shares listed on your proxy card will include the following shares, if applicable:

 

    shares held in the Medtronic, Inc. SIP;

 

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    shares held in the Medtronic Puerto Rico Employees’ SIP; and

 

    shares held in a certificate form or in a book-entry account at Wells Fargo Bank N.A., Medtronic’s transfer agent.

Please see Q&A above for “How do I vote?” with respect to such shares.

If you hold your shares through Charles Schwab, UBS or another bank, broker or nominee, you will receive a separate voting instruction form and should follow the instructions provided by your bank, broker or nominee in order to instruct them how to vote such shares.

Covidien: If you are a Covidien shareholder of record, the shares listed in your proxy card will include the following shares, if applicable:

 

    shares issued under the Covidien Savings Related Share Plan; and

 

    shares held in a book-entry account at Computershare Trust Company, N.A., Covidien’s transfer agent (including shares you may have transferred from UBS or Fidelity).

Please see Q&A above for “How do I vote?” with respect to such shares.

If you hold your shares through UBS, Fidelity or another bank, broker or nominee, you will receive a separate voting instruction form and should follow the instructions provided by your bank, broker or nominee in order to instruct them how to vote such shares.

 

Q: If my shares are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote my shares for me?

 

A: No. Your bank, broker or other nominee will not vote your shares if you do not provide your bank, broker or other nominee with a signed voting instruction form with respect to your shares, such failure to vote being referred to as a “broker non-vote.” Therefore, you should instruct your bank, broker or other nominee to vote your shares by following the directions your bank, broker or other nominee provides.

Brokers do not have discretionary authority to vote on any of the Medtronic proposals or on any of the Covidien proposals.

Please see “The Special Meeting of Medtronic’s Shareholders—Voting Shares Held in Street Name” beginning on page [] and “The Special Meetings of Covidien’s Shareholders—Voting Ordinary Shares Held in Street Name” beginning on page [].

 

Q: How many votes do I have?

 

A: Medtronic: You are entitled to one vote for each Medtronic common share that you owned as of 5:00 p.m. (Eastern Time in the U.S.) on the Medtronic record date. As of 5:00 p.m. (Eastern Time in the U.S.) on the Medtronic record date, [—] Medtronic common shares were outstanding and entitled to vote at the special meeting.

Covidien: You are entitled to one vote for each Covidien ordinary share that you owned as of 5:00 p.m. (Eastern Time in the U.S.) on the Covidien record date. As of 5:00 p.m. (Eastern Time in the U.S.) on the Covidien record date, [—] Covidien ordinary shares were outstanding and entitled to vote at the special Court-ordered meeting and at the EGM.

 

Q: What if I hold shares in both Medtronic and Covidien?

 

A:

If you are a shareholder of both Medtronic and Covidien, you will receive two separate packages of proxy materials. A vote as a Medtronic shareholder on the proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic or any of the other proposals at the Medtronic special meeting will not constitute a vote as a Covidien shareholder on the proposal to approve the scheme of arrangement or any of the other proposals at the

 

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  Covidien special Court-ordered meeting or EGM, or vice versa. THEREFORE, IF YOU ARE A RECORD HOLDER, PLEASE MARK, SIGN, DATE AND RETURN ALL PROXY CARDS THAT YOU RECEIVE, WHETHER FROM MEDTRONIC OR COVIDIEN, OR SUBMIT A SEPARATE PROXY AS BOTH A MEDTRONIC AND A COVIDIEN SHAREHOLDER FOR EACH SPECIAL MEETING, OVER THE INTERNET OR BY TELEPHONE. IF YOU HOLD YOUR SHARES THROUGH A BANK, BROKER OR OTHER NOMINEE, YOU SHOULD FOLLOW THE INSTRUCTIONS PROVIDED BY YOUR BANK, BROKER OR OTHER NOMINEE IN ORDER TO INSTRUCT THEM ON HOW TO VOTE SUCH SHARES AS BOTH A MEDTRONIC AND/OR A COVIDIEN SHAREHOLDER FOR EACH APPLICABLE SPECIAL MEETING.

 

Q: Should I send in my stock certificates now?

 

A: No. Medtronic shareholders that hold shares in certificated form should keep their existing stock certificates at this time. After the transaction is completed, you will receive written instructions for exchanging your stock certificates for New Medtronic ordinary shares and other consideration, if applicable.

 

Q: What do I need to do now?

 

A: If you are entitled to vote at a special meeting of your company’s shareholders, you can vote in person by completing a ballot at the special meeting, or you can vote by proxy before the special meeting. Even if you plan to attend your company’s special meeting, we encourage you to vote by proxy before the special meeting. After carefully reading and considering the information contained in this joint proxy statement/prospectus, including the Annexes and the documents incorporated by reference, please submit your proxy by telephone or internet in accordance with the instructions set forth on the relevant enclosed proxy card, or mark, sign and date the relevant proxy card, and return it in the enclosed prepaid envelope as soon as possible so that your shares may be voted at your company’s relevant special meeting. Your proxy card or your telephone or internet directions will instruct the persons identified as your proxy to vote your shares at your company’s relevant special meeting as directed by you.

If you are a shareholder of record and you sign and send in a proxy card but do not indicate how you want to vote, your proxy will be voted “FOR” each of the proposals.

If you hold your Medtronic common shares or Covidien ordinary shares through a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee when instructing them how to vote your Medtronic common shares or Covidien ordinary shares.

 

Q: May I change my vote after I have mailed my signed proxy card or voted by telephone or over the internet?

 

A: Yes, you may change your vote at any time before your proxy is voted at the Medtronic special meeting or at the Covidien special Court-ordered meeting or the Covidien EGM. You can do this in one of four ways:

 

  timely deliver a valid later-dated proxy by mail;

 

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  before the relevant special meeting, provide written notice that you have revoked your proxy to the secretary of Medtronic or Covidien, as applicable, so that it is received prior to midnight on the night before the relevant special meeting at the following address:

Medtronic, Inc.

710 Medtronic Parkway

Minneapolis, Minnesota 55432

Attention: Bradley E. Lerman, Corporate Secretary

Covidien public limited company

c/o Covidien

15 Hampshire Street

Mansfield, Massachusetts 02048

Attention: John W. Kapples, Secretary

 

  submit revised voting instructions by telephone or over the internet by following the instructions set forth on the proxy card; or

 

  attend the applicable special meeting and vote in person. Simply attending the meeting, however, will not revoke your proxy or change your voting instructions; you must vote by ballot at the meeting to change your vote.

If you have instructed a bank, broker or other nominee to vote your shares, you must follow directions received from your bank, broker or other nominee to change your vote or revoke your proxy.

 

Q: Who can help answer my questions?

 

A: If you have questions about the transaction, or if you need assistance in submitting your proxy or voting your shares or need additional copies of this joint proxy statement/prospectus or the enclosed proxy card(s), you should contact the proxy solicitation agent for the company in which you hold shares.

If you are a Medtronic shareholder, you should contact [—], the proxy solicitation agent for Medtronic, by mail at [—], by telephone at [—] (toll free) or [—] (collect) or by e-mail at [—]. If you are a Covidien shareholder, you should contact D.F. King & Co., Inc., the proxy solicitation agent for Covidien, by mail at 48 Wall Street, New York, New York 10005, by telephone at (800) 488-8035 (toll free in the U.S. and Canada) or (212) 269-5550 (collect), or by e-mail at covidien@dfking.com.

If your shares are held by a broker, bank or other nominee, you should contact your broker, bank or other nominee for additional information.

 

Q: Where can I find more information about Medtronic and Covidien?

 

A: You can find more information about Medtronic and Covidien from various sources described under “Where You Can Find More Information” beginning on page [].

 

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SUMMARY

This summary highlights selected information contained in this joint proxy statement/prospectus and may not contain all of the information that may be important to you. Accordingly, you should read carefully this entire joint proxy statement/prospectus, including the Annexes and the documents referred to or incorporated by reference in this joint proxy statement/prospectus. The page references have been included in this summary to direct you to a more complete description of the topics presented below. See also the section entitled “Where You Can Find More Information” beginning on page [] of this joint proxy statement/prospectus.

Information about the Companies (Page []) 

Medtronic

Medtronic is the global leader in medical technology. Medtronic was founded in 1949, incorporated as a Minnesota corporation in 1957 and today serves hospitals, physicians, clinicians, and patients in more than 140 countries worldwide. Medtronic is listed on the New York Stock Exchange (“NYSE”) (ticker symbol “MDT”). Medtronic’s principal executive offices are located at 710 Medtronic Parkway, Minneapolis, Minnesota 55432, and its telephone number is 763-514-4000.

Covidien

Covidien is a global healthcare products company that creates innovative medical solutions for better patient outcomes and delivers value through clinical leadership and excellence. Covidien develops, manufactures and sells a diverse range of industry-leading medical device and supply products. With 2013 revenue of $10.2 billion, as of September 27, 2013, Covidien has more than 38,000 employees worldwide in more than 70 countries, and its products are sold in over 150 countries. Covidien’s principal executive offices are located at 20 On Hatch, Lower Hatch Street, Dublin 2, Ireland. The telephone number at this location is +353 1 438-1700.

Covidien Ltd. was incorporated in Bermuda in 2000 as a wholly owned subsidiary of Tyco International Ltd. (“Tyco International”). On June 29, 2007, Tyco International distributed all of the shares of Covidien Ltd. to Tyco International shareholders. In December 2008, the Covidien Ltd. board of directors approved moving Covidien’s principal executive office from Bermuda to Ireland. On May 28, 2009, shareholders voted in favor of a reorganization proposal pursuant to which Covidien Ltd. common shares would be canceled and holders of such shares would receive ordinary shares of Covidien plc on a one-to-one basis. The reorganization transaction was completed on June 4, 2009, following approval from the Supreme Court of Bermuda, at which time Covidien plc replaced Covidien Ltd. as the ultimate parent company. Shares of the Irish company, Covidien plc, began trading on the NYSE on June 5, 2009, under the symbol “COV,” the same symbol under which Covidien Ltd. shares were previously traded.

On June 28, 2013, Covidien completed the spin-off of its Pharmaceuticals business to Covidien shareholders, through a distribution of all of the outstanding ordinary shares of Mallinckrodt plc, the company formed to hold Covidien’s former Pharmaceuticals business (the “2013 separation”).

New Medtronic

New Medtronic is a private limited company organized under the laws of Ireland (registered number 545333) for the purpose of holding Covidien, Medtronic, IrSub and U.S. AcquisitionCo as direct or indirect subsidiaries following completion of the transaction. To date, New Medtronic has not conducted any activities other than those incident to its formation, the execution of the Transaction Agreement, the preparation of applicable filings under the U.S. securities laws and regulatory filings made in connection with the proposed transaction, the execution of the Cash Bridge Credit Agreement (as defined herein) as the guarantor of the

 

 

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obligations of Medtronic as the initial borrower thereunder, the execution of the Bridge Credit Agreement (as defined herein) as the guarantor of the obligations of IrSub as the initial borrower thereunder and other matters related to the transactions contemplated by the Transaction Agreement. On or prior to the completion of the transaction, New Medtronic will be converted, pursuant to the Irish Companies Acts, into a public limited company and renamed “Medtronic plc.” Following the consummation of the transaction, each of Medtronic and Covidien will be a direct or indirect subsidiary of New Medtronic. Immediately following the transaction, based on the number of Medtronic and Covidien shares outstanding as of the record date, the former shareholders of Medtronic are expected to own approximately 70% of New Medtronic and the remaining approximately 30% of New Medtronic is expected to be owned by the former shareholders of Covidien. At and as of the effective time of the transaction, which is referred to in this joint proxy statement/prospectus as the “effective time”, it is expected that New Medtronic will be a publicly traded company listed on the NYSE under the ticker symbol “MDT.” New Medtronic’s registered office is located at 25–28 North Wall Quay, Dublin 1, Ireland, and its telephone number is +353 1 649-2000.

IrSub

IrSub is a private limited company organized under the laws of Ireland (registered number 545354) and a direct, wholly owned subsidiary of New Medtronic. To date, IrSub has not conducted any activities other than those incident to its formation, the execution of the Transaction Agreement, the preparation of regulatory filings made in connection with the proposed transaction, the execution of the Cash Bridge Credit Agreement as the initial borrower thereunder and other matters related to the transactions contemplated by the Transaction Agreement. IrSub, along with New Medtronic, will acquire Covidien pursuant to a scheme of arrangement under Section 201, involving a cancellation of the issued share capital of Covidien under sections 72 and 74, of the Irish Companies Act 1963. IrSub’s registered office is located at 25–28 North Wall Quay, Dublin 1, Ireland, and its telephone number is +353 1 649-2000.

U.S. AcquisitionCo

U.S. AcquisitionCo is a corporation incorporated in the State of Minnesota. To date, U.S. AcquisitionCo has not conducted any activities other than those incident to its formation, the execution of the Transaction Agreement, the preparation of regulatory filings made in connection with the proposed transaction and other matters related to the transactions contemplated by the Transaction Agreement. After completion of the transaction, Medtronic (as the surviving corporation in its merger with MergerSub) will be a direct, wholly owned subsidiary of U.S. AcquisitionCo and an indirect, wholly owned subsidiary of New Medtronic. U.S. AcquisitionCo’s registered office is 100 South Fifth Street #1075, Minneapolis, Minnesota 55402, and its telephone number is [—].

MergerSub

MergerSub is a limited liability company formed in the State of Minnesota and a direct, wholly owned subsidiary of U.S. AcquisitionCo. To date, MergerSub has not conducted any activities other than those incident to its formation, the execution of the Transaction Agreement, and the preparation of regulatory filings made in connection with the proposed transaction. Following the consummation of the transaction, MergerSub will merge with and into Medtronic, as a result of which the separate corporate existence of MergerSub will cease and Medtronic will continue as the surviving corporation, a direct, wholly owned subsidiary of U.S. AcquisitionCo and an indirect, wholly owned subsidiary of New Medtronic. MergerSub’s registered office is 100 South Fifth Street #1075, Minneapolis, Minnesota 55402, and its telephone number is [—].

 

 

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The Transaction (Page [])

On June 15, 2014, Medtronic and Covidien entered into the Transaction Agreement by and among Covidien, Medtronic, New Medtronic, IrSub, U.S. AcquisitionCo, and MergerSub. Under the terms of the Transaction Agreement, (i) New Medtronic and IrSub will acquire Covidien pursuant to a scheme of arrangement under Section 201, involving a cancellation of the issued share capital of Covidien under sections 72 and 74, of the Irish Companies Act 1963 and (ii) MergerSub will merge with and into Medtronic, with Medtronic continuing as the surviving corporation in the merger. As a result of the transaction, both Medtronic and Covidien will become wholly owned subsidiaries of New Medtronic. Prior to the closing of the transaction, New Medtronic will re-register as a public limited company, the ordinary shares of which are expected to be listed on the NYSE under the symbol “MDT.”

Medtronic reserves the right, subject to the prior written approval of the Irish Takeover Panel, to effect the acquisition by way of a takeover offer, as an alternative to the scheme, in the circumstances described in and subject to the terms of the Transaction Agreement. In such event, such takeover offer will be implemented on terms and conditions that are at least as favorable to Covidien shareholders (except for an acceptance condition set at 80 percent of the nominal value of the Covidien shares to which such offer relates and which are not already beneficially owned by Medtronic) as those which would apply in relation to the scheme, among other requirements.

Structure of the Transaction (Page [])

Upon the completion of the transaction, each of Medtronic and Covidien will be wholly owned subsidiaries of New Medtronic. The following diagrams illustrate in simplified terms the current structure of New Medtronic, Medtronic and Covidien and the structure of New Medtronic following the consummation of the transaction.

 

LOGO

 

 

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LOGO

Transaction Consideration to Medtronic Shareholders (Page []) and Scheme Consideration to Covidien Shareholders (Page []) 

As a result of the transaction, (i) each outstanding Medtronic common share will entitle its holder to receive one New Medtronic ordinary share from or at the direction of MergerSub in exchange for such Medtronic common share and (ii) each outstanding Covidien ordinary share will entitle its holder to receive (x) $35.19 in cash and (y) 0.956 of a New Medtronic ordinary share in exchange for such Covidien ordinary share.

Since Irish law does not recognize fractional shares held of record, New Medtronic will not issue any fractions of New Medtronic ordinary shares to Covidien shareholders or Medtronic shareholders in the transaction. Instead, the total number of New Medtronic ordinary shares that any Medtronic or Covidien shareholder would have been entitled to receive will be rounded down to the nearest whole number and all entitlements to fractional New Medtronic ordinary shares will be aggregated and sold by the exchange agent, with any sale proceeds being distributed in cash pro rata to the Covidien shareholders and Medtronic shareholders whose fractional entitlements have been sold.

Treatment of Medtronic Stock Options and Other Medtronic Equity-Based Awards (Page []) 

At the effective time of the merger, each outstanding Medtronic option, restricted stock award and other equity award will be converted into an option, restricted stock award or other equity award, as applicable, denominated in New Medtronic ordinary shares, which award will be subject to the same number of New Medtronic ordinary shares and the same terms and conditions (including vesting and other lapse restrictions) as were applicable to the Medtronic award in respect of which it was issued immediately prior to the effective time.

Treatment of Covidien Stock Options and Covidien Share Awards (Page []) 

Treatment of Covidien Options

Each option to purchase Covidien ordinary shares that is outstanding and unexercised immediately prior to the effective time of the scheme will be assumed by New Medtronic and will be converted into an option to

 

 

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acquire a number of New Medtronic ordinary shares (rounded down to the nearest whole share) equal to the product obtained by multiplying (a) the number of Covidien ordinary shares subject to the Covidien option by (b) the equity award conversion ratio (as defined below), at an exercise price (rounded up to the nearest whole cent) per New Medtronic ordinary share equal to the quotient obtained by dividing (i) the exercise price per Covidien ordinary share by (ii) the equity award conversion ratio. Each New Medtronic option as so assumed and converted will otherwise continue to have, and will otherwise be subject to, the same terms and conditions as applied to the applicable Covidien option immediately prior to the effective time of the scheme.

For purposes of this joint proxy statement/prospectus, “equity award conversion ratio” means the sum of (A) 0.956 plus (B) the quotient obtained by dividing $35.19 by the volume weighted average price of Medtronic common stock over a 10-trading day period that ends on the second to last trading day prior to the effective time of the scheme.

Treatment of Covidien Share Awards

For purposes of this joint proxy statement/prospectus, “Covidien share award” means an award denominated in Covidien ordinary shares, other than a Covidien option.

Covidien Share Awards Granted Prior to June 15, 2014. Each Covidien share award that is outstanding immediately prior to the effective time of the scheme and was granted prior to June 15, 2014 will be cancelled and converted into the right to receive the scheme consideration in respect of each Covidien ordinary share underlying the Covidien share award (including any corresponding dividend equivalent units), less applicable tax withholdings (which will be deducted first from the share portion of such consideration and then from the cash portion). For any performance-based Covidien share award (including any corresponding dividend equivalent units), the number of ordinary shares underlying the Covidien share award will be based on actual performance measured over a 60–trading day period that ends on the sixth business day prior to the effective time of the scheme.

Covidien Share Awards Granted On or After June 15, 2014. Each Covidien share award that is outstanding immediately prior to the effective time of the scheme and was granted on or after June 15, 2014 will be converted into a New Medtronic award with respect to a number of New Medtronic ordinary shares (rounded to the nearest whole share) equal to the product obtained by multiplying (a) the number of Covidien ordinary shares subject to the Covidien share award (including any corresponding dividend equivalent units) immediately prior to the effective time of the scheme by (b) the equity award conversion ratio. Each New Medtronic share award as so assumed and converted will continue to have, and will be subject to, the same terms and conditions as applied to the applicable Covidien share award immediately prior to the effective time of the scheme.

Comparative Per Share Market Price and Dividend Information (Page []) 

Medtronic common shares are listed on the NYSE under the symbol “MDT.” Covidien ordinary shares are listed on the NYSE under the symbol “COV.” The following table shows the closing prices of Medtronic common shares and Covidien ordinary shares as reported on the NYSE on June 13, 2014, the last trading day before the entry into the Transaction Agreement was announced, and on [—], 2014, the last practicable day before the printing of this joint proxy statement/prospectus. This table also shows the equivalent value of the consideration per Covidien ordinary share, which was calculated by adding (i) the cash portion of the consideration to be paid to Covidien shareholders, or $35.19, and (ii) the closing price of Medtronic common shares as of the specified date multiplied by the exchange ratio of 0.956.

 

     Covidien
Ordinary
Shares
     Medtronic
Common
Shares
     Equivalent Value of
Transaction Consideration
Per Covidien Ordinary Share
 

June 13, 2014

   $ 72.02       $ 60.70       $ 93.22   

[—], 2014

     [—]         [—]         [—]   

 

 

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Recommendation of the Medtronic Board of Directors and Medtronics Reasons for the Transaction (Page [])

The board of directors of Medtronic has unanimously approved the plan of merger contained in the Transaction Agreement and determined that the entry into the Transaction Agreement and the merger are fair to and in the best interests of Medtronic and its shareholders.

The Medtronic board of directors unanimously recommends that Medtronic shareholders vote:

 

  “FOR” the proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic;

 

  “FOR” the proposal to reduce the share premium account of New Medtronic to allow the creation of distributable reserves;

 

  “FOR” the approval, on a non-binding, advisory basis, of specified compensatory arrangements between Medtronic and its named executive officers; and

 

  “FOR” the proposal to approve adjournments of the special meeting to another time or place if necessary or appropriate (i) to solicit additional proxies if there are insufficient votes at the time of the Medtronic special meeting to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic, (ii) to provide to Medtronic shareholders in advance of the Medtronic special meeting any supplement or amendment to the joint proxy statement/prospectus or (iii) to disseminate any other information which is material to Medtronic shareholders voting at the Medtronic special meeting.

The Medtronic board of directors considered many factors in making its determination that the entry into the Transaction Agreement and the merger are fair to and in the best interests of Medtronic and its shareholders and recommending adoption of the plan of merger contained in the Transaction Agreement by the Medtronic shareholders. For a more complete discussion of these factors, see “The Transaction—Recommendation of the Medtronic Board of Directors and Medtronic’s Reasons for the Transaction,” beginning on page [] of this joint proxy statement/prospectus.

In considering the recommendation of the Medtronic board of directors, you should be aware that directors and executive officers of Medtronic have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders. See “The Transaction—Interests of Certain Persons in the Transaction—Medtronic.

Opinion of Medtronics Financial Advisor (Page []) 

Perella Weinberg Partners LP, which we refer to in this joint proxy statement/prospectus as Perella Weinberg, rendered its oral opinion, subsequently confirmed in writing, to the Medtronic board of directors that, as of June 15, 2014, and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth in the written opinion, the merger consideration of one New Medtronic ordinary share to be received for each share of Medtronic common stock (taking into account the acquisition) as provided for in the Transaction Agreement was fair, from a financial point of view, to the holders of Medtronic common stock (other than Medtronic and its subsidiaries).

The full text of Perella Weinberg’s written opinion, dated June 15, 2014, which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken by Perella Weinberg, is attached as Appendix E and is incorporated by reference herein. The opinion does not address Medtronic’s underlying business decision to enter into the transaction or the relative merits of the transaction as compared with any other strategic alternative

 

 

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that may have been available to Medtronic. The opinion does not constitute a recommendation to any holder of Medtronic common stock or Covidien ordinary shares as to how such holder should vote or otherwise act with respect to the transaction or any other matter and does not in any manner address the prices at which Medtronic common stock or Covidien ordinary shares will trade at any time. In addition, Perella Weinberg expressed no opinion as to the fairness of the transaction, or any consideration received in connection with the transaction, to the holders of any other class of securities, creditors or other constituencies of Medtronic. Perella Weinberg provided its opinion for the information and assistance of the Medtronic board of directors in connection with, and for the purposes of its evaluation of, the transaction. This summary is qualified in its entirety by reference to the full text of the opinion.

For a description of the opinion that the Medtronic board of directors received from Perella Weinberg, see “The Transaction—Opinion of Medtronic’s Financial Advisor” beginning on page [] of this joint proxy statement/prospectus.

Recommendation of the Covidien Board of Directors and Covidiens Reasons for the Transaction (Page [])

The Covidien board of directors has unanimously approved the Transaction Agreement and determined that the Transaction Agreement and the transactions contemplated by the Transaction Agreement, including the scheme, were advisable for, fair to and in the best interests of Covidien and the Covidien shareholders, and that the terms of the scheme were fair and reasonable.

The Covidien board of directors unanimously recommends that Covidien shareholders vote:

 

  “FOR” the scheme of arrangement at the special Court-ordered meeting;

 

  “FOR” the scheme of arrangement at the EGM;

 

  “FOR” the cancellation of any Covidien ordinary shares in issue before [—], Irish time, on the day before the Irish High Court hearing to sanction the scheme;

 

  “FOR” the authorization of the directors of Covidien to allot and issue new Covidien shares, fully paid up, to New Medtronic and IrSub in connection with effecting the scheme;

 

  “FOR” amendment of the articles of association of Covidien so that any ordinary shares of Covidien that are issued at or after [—], Irish time on the last business day before the scheme becomes effective are acquired by New Medtronic and/or IrSub for the scheme consideration;

 

  “FOR” the reduction of the share premium account of New Medtronic resulting from (i) the issuance of New Medtronic shares pursuant to the scheme and (ii) a subscription for New Medtronic shares by MergerSub prior to the merger, in order to create distributable reserves of New Medtronic; and

 

  “FOR” the approval, on a non-binding, advisory basis of specified compensatory arrangements between Covidien and its named executive officers.

The Covidien board of directors considered many factors in making its determination that the Transaction Agreement and the transactions contemplated thereby, including the scheme, were advisable for, fair to and in the best interests of Covidien and Covidien’s shareholders, and that the terms of the scheme were fair and reasonable. For a more complete discussion of these factors, see “The Transaction—Recommendation of the Covidien Board of Directors and Covidien’s Reasons for the Transaction.”

In considering the recommendation of the Covidien board of directors, Covidien shareholders should be aware that directors and executive officers of Covidien have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders. See “The Transaction—Interests of Certain Persons in the Transaction—Covidien.”

 

 

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Opinion of Covidiens Financial Advisor (Page []) 

Goldman, Sachs & Co., which we refer to in this joint proxy statement/prospectus as Goldman Sachs, delivered its opinion to Covidien’s board of directors that, as of June 15, 2014 and based upon and subject to the factors and assumptions set forth therein, the scheme consideration to be paid pursuant to the Transaction Agreement was fair from a financial point of view to the holders (other than Medtronic and its affiliates) of Covidien ordinary shares.

The full text of the written opinion of Goldman Sachs, dated June 15, 2014, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex F. Goldman Sachs provided its opinion for the information and assistance of Covidien’s board of directors in connection with its consideration of the transaction. The Goldman Sachs opinion is not a recommendation as to how any holder of Covidien ordinary shares should vote with respect to the transaction or any other matter. This summary is qualified in its entirety by reference to the full text of the opinion.

For a description of the opinion that the Covidien board of directors received from Goldman Sachs, see “The Transaction—Opinion of Covidien’s Financial Advisor” beginning on page [] of this joint proxy statement/prospectus.

Interests of Certain Persons in the Transaction (Page [])

Medtronic

In considering the recommendation of the Medtronic board of directors, Medtronic shareholders should be aware that directors and executive officers have interests in the proposed transaction that are in addition to, or different from, any interests they may have as shareholders. Interests of Medtronic’s directors and executive officers that may be in addition to, or different from, any interests of Medtronic’s shareholders include that:

 

  New Medtronic and/or Medtronic intends to enter into an agreement with each director and executive officer of Medtronic providing for a gross-up with respect to any excise taxes that may be imposed pursuant to Section 4985 of the Code (as defined under “Material Tax Consequences of the Proposed Transaction” below), which excise tax is not applicable to other Medtronic shareholders. No Medtronic director or executive officer will receive a gross-up from New Medtronic or Medtronic in respect of any capital gains tax imposed on the exchange of Medtronic common shares held by such Medtronic director or executive officer in the transaction, and each Medtronic director and executive officer will be responsible for such capital gains tax just like any other Medtronic shareholder.

 

  Medtronic’s directors and executive officers are entitled to continued indemnification and insurance coverage under Medtronic’s organizational documents, Minnesota law and the Transaction Agreement.

These interests are discussed in more detail in the section entitled “The Transaction—Interests of Certain Persons in the Transaction—Medtronic” beginning on page []. The Medtronic board of directors was aware of the additional or different interests set forth herein and considered such interests along with other matters in approving the Transaction Agreement and the proposed transaction.

Covidien

In considering the recommendation of the Covidien board of directors, Covidien shareholders should be aware that directors and executive officers of Covidien have interests in the proposed transaction that are in addition to, or different from, any interests they may have as shareholders. Interests of Covidien’s directors and executive officers that may be in addition to, or different from, any interests of Covidien’s shareholders include:

 

 

The Transaction Agreement provides (1) for the assumption by New Medtronic of (a) all outstanding Covidien options and (b) all Covidien share awards granted on or after June 15, 2014, and (2) for the vesting

 

 

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and settlement of all Covidien share awards granted prior to June 15, 2014. In addition, pursuant to the terms of the Covidien stock plan and applicable award agreements, Covidien share awards held by directors who cease to provide services to Covidien as a result of the transaction will become fully vested as of the effective time of the scheme.

 

  Covidien’s executive officers are covered by Covidien’s change in control severance plan, which provides for severance benefits in the event of certain qualifying terminations of employment in connection with or following the transaction.

 

 

  Under the Transaction Agreement, Covidien may enter into an agreement with each director and executive officer of Covidien providing for a gross-up with respect to any excise taxes that may be imposed pursuant to Section 4985 of the Code, which excise tax is not applicable to other Covidien shareholders. No Covidien director or executive officer will receive a gross-up from New Medtronic or Covidien in respect of any capital gains tax imposed on the exchange of Covidien ordinary shares held by such Covidien director or executive officer in the transaction, and each Covidien director and executive officer will be responsible for such capital gains tax just like any other Covidien shareholder.

 

  The Transaction Agreement provides that two members of the Covidien board of directors as of June 15, 2014 will serve on the board of directors of New Medtronic following the effective time of the scheme.

 

  Covidien’s directors and executive officers are entitled to continued indemnification and insurance coverage under indemnification agreements, Covidien’s organizational documents and the Transaction Agreement.

These interests are discussed in more detail in the section entitled “The Transaction—Interests of Certain Persons in the Transaction—Covidien” beginning on page []. The Covidien board of directors was aware of the additional or different interests set forth herein and considered such interests along with other matters in approving the Transaction Agreement and the proposed transaction.

Other Compensation Matters (Page []) 

With respect to change of control agreements Medtronic has entered into with its executive officers, the proposed transaction does not constitute a change of control.

Board of Directors and Management after the Transaction (Page []) 

Pursuant to the Transaction Agreement, effective as of the closing of the transaction, the board of directors of New Medtronic is expected to have thirteen members, consisting of (i) no more than 11 individuals who were members of the Medtronic board of directors immediately prior to the effective time and (ii) two individuals who were members of the Covidien board of directors as of June 15, 2014, to be selected by the Nominating and Corporate Governance Committee of the Medtronic board of directors in consultation with Covidien.

As of the date of this joint proxy statement/prospectus, the Nominating and Corporate Governance Committee of the Medtronic board of directors has not finally determined which Covidien directors will be designated to the board of directors of New Medtronic. The two Covidien directors who will serve on the New Medtronic board will be selected prior to the completion of the transaction.

The New Medtronic senior management team after the acquisition and the merger is expected to be the same as the current senior management team of Medtronic with the likely addition of one or more members of the senior management team of Covidien.

Material Tax Consequences of the Proposed Transaction (Page []) 

Medtronic

For U.S. federal income tax purposes, the receipt of New Medtronic ordinary shares and cash in lieu of fractional New Medtronic ordinary shares in exchange for Medtronic common shares pursuant to the merger will

 

 

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be a taxable transaction. A U.S. holder of Medtronic shares will generally recognize taxable gain or loss equal to the difference between (1) the holder’s adjusted tax basis in the Medtronic common shares surrendered in the exchange and (2) the sum of the fair market value of the New Medtronic ordinary shares and any cash in lieu of fractional New Medtronic ordinary shares received as consideration in the merger. In certain circumstances, Section 304 of the Internal Revenue Code of 1986, as amended (the “Code”), could cause a U.S. holder of Medtronic shares whose percentage interest in New Medtronic after the proposed transaction and related purchases or sales is greater than or equal to such U.S. holder’s percentage interest in Medtronic immediately before the transaction (for example, as a result of having a higher percentage ownership in Covidien than in Medtronic) to be treated as receiving a dividend up to the fair market value of the New Medtronic ordinary shares (plus any cash in lieu of fractional shares) issued in the merger, regardless of such holder’s gain or loss on its Medtronic shares. Non-U.S. holders may be subject to withholding tax in certain circumstances, regardless of whether they receive any cash consideration. See “Material Tax Consequences of the Proposed Transaction—U.S. Federal Income Tax Treatment of the Proposed Transaction—Tax Consequences of the Merger to Holders of Medtronic Common Shares” beginning on page [] of this joint proxy statement/prospectus.

A holder that actually or constructively owns both Medtronic common shares and Covidien ordinary shares should consult its own tax advisors regarding the possible desirability of selling its shares in either Medtronic or Covidien prior to the transaction, or of selling its shares in New Medtronic immediately after the transaction. See the discussions below under “Material Tax Consequences of the Proposed Transaction—U.S. Federal Income Tax Treatment of the Proposed Transaction—Tax Consequences of the Merger to Holders of Medtronic Common Shares—Special Consequences of the Merger to Holders of Medtronic Common Shares That Also Own Covidien Ordinary Shares, or That Acquire Additional New Medtronic Ordinary Shares in Connection with the Transaction” and “—Tax Consequences of the Scheme to Holders of Covidien Ordinary Shares—Special Consequences of the Scheme to Holders of Covidien Ordinary Shares That Also Own Medtronic Common Shares, or That Acquire Additional New Medtronic Ordinary Shares in Connection with the Transaction.”

For Irish tax purposes, the receipt of New Medtronic ordinary shares and cash in lieu of fractional New Medtronic ordinary shares in exchange for Medtronic common shares pursuant to the merger should not be within the charge to Irish capital gains tax in the case of Medtronic shareholders who are neither resident nor ordinarily resident in Ireland for Irish tax purposes and who do not hold their shares in connection with a trade carried on by such shareholders through an Irish branch or agency. See “—Material Tax Consequences of the Proposed Transaction—Irish Tax Considerations—Irish Tax on Chargeable Gains.

Covidien

For U.S. federal income tax purposes, the receipt of cash and New Medtronic ordinary shares for Covidien ordinary shares pursuant to the scheme of arrangement will be a taxable transaction. A U.S. holder of Covidien ordinary shares will generally recognize taxable gain or loss equal to the difference between (1) the holder’s adjusted tax basis in the Covidien ordinary shares surrendered in the exchange and (2) the sum of the fair market value of the New Medtronic ordinary shares and the amount of cash (including cash in lieu of fractional New Medtronic ordinary shares) received in the scheme. In certain circumstances, Section 304 of the Code could cause a U.S. holder of Covidien shares whose percentage interest in New Medtronic after the proposed transaction and related purchases or sales is greater than or equal to such U.S. holder’s percentage interest in Covidien immediately before the transaction (for example, as a result of having a higher percentage ownership in Medtronic than in Covidien prior to the proposed transaction) to be treated as receiving a dividend up to the entire amount of the cash consideration paid in the scheme, regardless of such holder’s gain or loss on its Covidien shares. See “Material Tax Consequences of the Proposed Transaction—U.S. Federal Income Tax Treatment of the Proposed Transaction—Tax Consequences of the Scheme to Holders of Covidien Ordinary Shares” beginning on page [] of this joint proxy statement/prospectus.

 

 

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A holder that actually or constructively owns both Medtronic common shares and Covidien ordinary shares should consult its own tax advisors regarding the possible desirability of selling its shares in either Medtronic or Covidien prior to the transaction, or of selling its shares in New Medtronic immediately after the transaction. See the discussions below under “Material Tax Consequences of the Proposed Transaction—U.S. Federal Income Tax Treatment of the Proposed Transaction—Tax Consequences of the Merger to Holders of Medtronic Common Shares—Special Consequences of the Merger to Holders of Medtronic Common Shares That Also Own Covidien Ordinary Shares, or That Acquire Additional New Medtronic Ordinary Shares in Connection with the Transaction” and “—Tax Consequences of the Scheme to Holders of Covidien Ordinary Shares—Special Consequences of the Scheme to Holders of Covidien Ordinary Shares That Also Own Medtronic Common Shares, or That Acquire Additional New Medtronic Ordinary Shares in Connection with the Transaction.”

For Irish tax purposes, the receipt of cash and New Medtronic ordinary shares for Covidien ordinary shares pursuant to the scheme of arrangement should not be within the charge to Irish capital gains tax in the case of Covidien shareholders who are neither resident nor ordinarily resident in Ireland for Irish tax purposes and who do not hold their shares in connection with a trade carried on by such shareholders through an Irish branch or agency. See “—Material Tax Consequences of the Proposed Transaction—Irish Tax Considerations—Irish Tax on Chargeable Gains” and “Medtronic / Covidien S-4—Excerpts—Part 2—Explanatory Statement—clause 10 Taxation.”

Legal Proceedings Regarding the Transaction (Page [])

On July 2, 2014, a putative shareholder class action complaint was filed in the District Court, Fourth Judicial District, of Hennepin County, Minnesota, Merenstein v. Medtronic, Inc., et al., 27-CV-14-11452, by a purported shareholder of Medtronic. The complaint asserts various causes of action arising under Minnesota law against each member of Medtronic’s board of directors, including that they allegedly breached fiduciary duties in connection with the transaction. The complaint also asserts a claim of aiding and abetting against Covidien. Finally, against these defendants and Medtronic, New Medtronic and an entity described as “New Medtronic Sub,” that is purportedly a private limited company incorporated in Ireland, the complaint asserts a claim for “equitable relief.” The plaintiff seeks, among other things, an order enjoining or rescinding the transaction and an award of attorney’s and other fees and costs. The defendants believe the complaint is without merit.

On July 10, 2014, a putative shareholder class action complaint was filed in the United States District Court for the District of Massachusetts by a purported shareholder of Covidien under the caption Taxman v. Covidien plc, et al., 14-cv-12949 (the “Federal Action”). The Federal Action names as defendants the members of the Covidien board of directors, and alleges that Covidien’s directors breached fiduciary duties in connection with the transaction because, among other things, the transaction allegedly involves an unfair price, a conflicted and unfair process, self-dealing, and unreasonable deal protection devices. The Federal Action also names as defendants Covidien, Medtronic, New Medtronic, IrSub, U.S. AcquisitionCo and MergerSub, and alleges that these defendants aided and abetted the purported breaches of fiduciary duty. The plaintiff seeks, among other things, an order enjoining or rescinding the transaction and an award of attorney’s and other fees and costs. The defendants believe the complaint is without merit.

No Dissenters Rights (Page []) 

Under the Minnesota Business Corporations Act (the “MBCA”), holders of Medtronic common shares do not have appraisal or dissenters’ rights with respect to the merger or any of the other transactions described in this joint proxy statement/prospectus.

Under Irish law, holders of Covidien ordinary shares do not have appraisal or dissenters’ rights with respect to the acquisition or any of the other transactions described in this joint proxy statement/prospectus.

 

 

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Regulatory Approvals Required (Page []) 

United States Antitrust

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder by the U.S. Federal Trade Commission (the “FTC”) (the “HSR Act”), the acquisition cannot be consummated until, among other things, notifications have been given and certain information has been furnished to the FTC and the Antitrust Division of the U.S. Department of Justice (the “Antitrust Division”), and specified waiting period requirements have been satisfied. On July 7, 2014, each of Medtronic and Covidien filed a Pre-Merger Notification and Report Form pursuant to the HSR Act with the Antitrust Division and the FTC. The waiting period under the HSR Act is scheduled to expire at 11:59 p.m. (Eastern Time in the U.S.) on August 6, 2014. However, before that time, the Antitrust Division or the FTC can choose to shorten the waiting period by granting early termination or may extend the waiting period by requesting additional information or documentary material from the parties. If such request were made, the waiting period would be extended until 11:59 p.m. (Eastern Time in the U.S.) on the 30th day after certification of substantial compliance by the parties with such request (or longer if the parties so agreed). As a practical matter, if such request were made, it could take a significant period of time to achieve substantial compliance with such a request.

Other Regulatory Clearances

Medtronic and Covidien derive revenues in other jurisdictions where merger or acquisition control filings or clearances are or may be required, including clearance by the European Commission and in Canada, China, Israel, Japan, Russia, South Korea, and Turkey. The transaction cannot be consummated until after the applicable waiting periods have expired or the relevant approvals have been obtained under the antitrust and competition laws of the countries listed above where merger control filings or approvals are or may be required.

Irish Court Approvals

The scheme of arrangement requires the approval of the Irish High Court, which involves an application by Covidien to the Irish High Court to sanction the scheme. The Irish High Court must also confirm the reduction of capital of Covidien that would be effected by EGM resolution #2, which is a necessary step in the implementation of the scheme.

The creation of distributable reserves of New Medtronic, which involves a reduction of New Medtronic’s share premium account, also requires the approval of the Irish High Court. See “Creation of Distributable Reserves of New Medtronic.

Listing of New Medtronic Ordinary Shares on Stock Exchange (Page []) 

New Medtronic ordinary shares are currently not traded or quoted on a stock exchange or quotation system. New Medtronic expects that, following the transaction, New Medtronic ordinary shares will be listed for trading under the symbol “MDT” on the NYSE.

Conditions to the Completion of the Acquisition and the Merger (Page []) 

The scheme and the completion of the acquisition is subject to the satisfaction (or waiver, to the extent permitted) of all of the following conditions:

 

  the approval of the scheme by the Covidien shareholders at the special Court-ordered meeting (or at any adjournment of such meeting);

 

  certain of the EGM resolutions being duly passed by the Covidien shareholders at the EGM (or at any adjournment of such meeting);

 

 

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  the Irish High Court’s sanction of the scheme of arrangement (without material modification) and confirmation of the reduction of the share premium account and registration with the Registrar of Companies;

 

  the adoption of the plan of merger set forth in the Transaction Agreement by Medtronic shareholders as required by the MBCA and Article I of the bylaws of Medtronic;

 

  the NYSE having authorized, and not withdrawn its authorization, for listing all of the New Medtronic ordinary shares to be issued in connection with the acquisition and the merger, subject to satisfaction of any conditions to which such approval is expressed to be subject;

 

  all applicable waiting periods under the HSR Act in connection with the acquisition and/or the merger having expired or having been terminated;

 

  the European Commission deciding that it does not intend to initiate any proceedings under Article 6(1)(c) of the Council Regulation (EC) No. 139/2004 (the “EC Merger Regulation”) in respect of the acquisition or to refer the acquisition (or any aspect of the acquisition) to a competent authority of an European Economic Area (“EEA”) member state under Article 9(1) of the EC Merger Regulation or otherwise deciding that the acquisition is compatible with the common market pursuant to Article 6(1)(b) of the EC Merger Regulation;

 

  all required clearances having been obtained and remaining in full force and effect and applicable waiting periods having expired, lapsed or been terminated (as appropriate), in each case in connection with the acquisition and/or the merger, under the antitrust, competition or foreign investment laws of Canada, China, Israel, Japan, Turkey, Russia and South Korea;

 

  the registration statement on Form S-4 of which this joint proxy statement/prospectus is a part having become effective under the Securities Act of 1933 and not being the subject of any stop order or proceedings initiated by the U.S. Securities and Exchange Commission (“SEC”) seeking any stop order;

 

  no (i) law, (ii) injunction, restraint or prohibition by any court of competent jurisdiction or (iii) injunction, restraint or prohibition under any antitrust order by any relevant authority which prohibits consummation of the acquisition or the merger having been enacted or entered and continuing to be in effect;

 

  there having been no change in applicable law (whether or not such change in law is yet effective) with respect to Section 7874 of the Code (or any other U.S. tax law), or official interpretation thereof as set forth in published guidance by the Internal Revenue Service (“IRS”) (other than IRS News Releases) (whether or not such change in official interpretation is yet effective), and no bill that would implement such a change has been passed in identical (or substantially identical such that a conference committee is not required prior to submission of such legislation for the President’s approval or veto) form by both the United States House of Representatives and the United States Senate and for which the time period for the President of the United States to sign or veto such bill has not yet elapsed, in each case, that, once effective, in the opinion of nationally recognized U.S. tax counsel, would cause New Medtronic to be treated as a United States domestic corporation for United States federal income tax purposes; and

 

  the Transaction Agreement not having been terminated in accordance with its terms.

In addition, Medtronic’s and Covidien’s obligation to effect the acquisition is conditioned upon:

 

  the accuracy of the other party’s representations and warranties, subject to specified materiality standards;

 

  the performance by the other party of its obligations and covenants under the Transaction Agreement in all material respects; and

 

  the delivery by the other party of an officer’s certificate certifying such accuracy of its representations and warranties and such performance of its obligations and covenants.

 

 

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If Medtronic is required to make an offer for Covidien shares under the provisions of Rule 9 of the Irish Takeover Rules, Medtronic may make such alterations to the conditions set forth above as are necessary to comply with the provisions of that rule. Additionally, as required by Rule 12(b)(i) of the Irish Takeover Rules, to the extent that the acquisition would give rise to a concentration with a Community dimension within the scope of the EC Merger Regulation, the scheme will, except as otherwise approved by the Panel, lapse if the European Commission initiates proceedings in respect of that concentration under Article 6(1)(c) of the EC Merger Regulation or refers the concentration to a competent authority of a member state under Article 9(1) of the EC Merger Regulation prior to the date of the special Court-ordered meeting.

The Acquisition is also conditioned on the scheme becoming effective and unconditional by not later than June 15, 2015 (or earlier if required by the Panel or later if the parties agree and, if required, the Panel consents and the Irish High Court allows). In addition, the scheme will lapse unless it is effective on or prior to June 15, 2015. The merger is conditioned only upon the consummation and implementation of the scheme and the acquisition. See “The Transaction Agreement—Conditions to the Completion of the Acquisition and the Merger” beginning on page [] of this joint proxy statement/prospectus. The complete text of the conditions appendix is attached as Annex B to this joint proxy statement/prospectus.

Termination of the Transaction Agreement (Page []) 

The Transaction Agreement may be terminated at any time prior to the time the scheme becomes effective in any of the following ways:

 

  by mutual written consent of Medtronic and Covidien;

 

  by either Medtronic or Covidien:

 

    if (i) after completion of the special Court-ordered meeting or the EGM, the necessary resolutions have not been approved by the requisite votes, or (ii) after completion of the Medtronic shareholders meeting, the necessary Medtronic shareholder approval has not been obtained;

 

    subject to certain exceptions, if the transaction has not been consummated by 5:00 p.m., New York City time, on March 15, 2015, subject to an extension to June 15, 2015, in certain circumstances if the only outstanding unsatisfied conditions relate to antitrust approval;

 

    if the Irish High Court declines or refuses to sanction the scheme, unless both parties agree in writing that the decision of the Irish High Court will be appealed;

 

    subject to certain exceptions, if an injunction that permanently restrains, enjoins or otherwise prohibits the consummation of the acquisition or the merger has become final and non-appealable; or

 

    if there has been a change in applicable law (whether or not such change in law is yet effective) with respect to Section 7874 of the Code (or any other U.S. tax law), or official interpretation thereof as set forth in published guidance by the IRS (other than IRS News Releases) (whether or not such change in official interpretation is yet effective), or there has been a bill that would implement such a change passed in identical (or substantially identical such that a conference committee is not required prior to submission of such legislation for the President’s approval or veto) form by both the United States House of Representatives and the United States Senate and for which the time period for the President of the United States to sign or veto such bill has not yet elapsed, in each case, that, once effective, in the opinion of nationally recognized U.S. tax counsel, would cause New Medtronic to be treated as a United States domestic corporation for United States federal income tax purposes;

 

  by Covidien:

 

   

in certain circumstances if Medtronic, New Medtronic, IrSub, U.S. AcquisitionCo or MergerSub breaches or fails to perform in any material respect any of its covenants or other agreements contained

 

 

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in the Transaction Agreement or if any of its representations or warranties set forth in the Transaction Agreement are inaccurate such that certain closing conditions are incapable of being satisfied and the breach is not reasonably capable of being cured by March 15, 2015 (or, if extended in certain circumstances under which the only outstanding unsatisfied conditions relate to antitrust approval, June 15, 2015);

 

    prior to obtaining Covidien shareholder approval, in order to enter into an agreement providing for a Covidien Superior Proposal (as defined herein); or

 

  by Medtronic:

 

    in certain circumstances if Covidien breaches or fails to perform in any material respect any of its covenants or other agreements contained in the Transaction Agreement or if any of its representations or warranties set forth in the Transaction Agreement are inaccurate such that certain closing conditions are incapable of being satisfied and the breach is not reasonably capable of being cured by March 15, 2015 (or, if extended in certain circumstances under which the only outstanding unsatisfied conditions relate to antitrust approval, June 15, 2015).

Reverse Termination Payment

If the Transaction Agreement is terminated by Covidien or Medtronic after a Medtronic shareholder vote against the adoption of the plan of merger contained in the Transaction Agreement following a change in recommendation by the board of directors of Medtronic with respect thereto, then Medtronic must pay $850,000,000 to Covidien, provided that either (i) Covidien shareholders have approved the scheme at the special Court-ordered meeting and the necessary resolutions to effect the transaction at the EGM or (ii) Medtronic has effected such termination prior to the special Court-ordered meeting and the EGM being completed. See “The Transaction Agreement—Termination” beginning on page [] of this joint proxy statement/prospectus.

Expenses Reimbursement Agreement (Page []) 

In connection with the execution of the Transaction Agreement, Medtronic and Covidien entered into an expenses reimbursement agreement, the terms of which have been approved by the Irish Takeover Panel. Under the expenses reimbursement agreement, Covidien has agreed to pay to Medtronic the documented, specific and quantifiable third-party costs and expenses incurred by Medtronic in connection with the acquisition upon the termination of the Transaction Agreement in specified circumstances. The maximum amount payable by Covidien to Medtronic pursuant to the expenses reimbursement agreement (the “Expense Reimbursement Amount”) is an amount equal to 1% of the aggregate value of the issued share capital of Covidien as ascribed by the terms of the acquisition. The cap on the Expense Reimbursement Amount is approximately $429 million. Medtronic does not expect the transaction-related costs reimbursable pursuant to the expenses reimbursement agreement to meet or exceed the Expense Reimbursement Amount.

See “Expenses Reimbursement Agreement” beginning on page [] of this joint proxy statement/prospectus. The complete text of the expenses reimbursement agreement is attached as Annex C to this joint proxy statement/prospectus.

Financing Relating to the Transaction (Page []) 

Bridge Credit Agreement

On June 15, 2014, Medtronic entered into a 364-day senior unsecured bridge credit agreement (the “Bridge Credit Agreement”) among Medtronic, New Medtronic, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent. Under the Bridge Credit Agreement, Bank of America, N.A. has committed to provide Medtronic with unsecured financing in an aggregate principal amount of up to $2,800,000,000. The commitments are intended to be drawn to finance, in part, the cash component of the

 

 

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scheme consideration and certain transaction expenses to the extent Medtronic does not arrange for alternative financing prior to the consummation of the transaction. New Medtronic has guaranteed the obligations of Medtronic under the Bridge Credit Agreement. If Medtronic draws loans under the Bridge Credit Agreement, it intends to refinance any debt incurred thereunder.

Cash Bridge Credit Agreement

Medtronic expects that it, New Medtronic and IrSub will require an additional approximately $13.2 billion in order to finance the cash component of the scheme consideration and certain transaction expenses. Medtronic expects that it, or its affiliates, will have cash equivalents in such amount available to it by the time of the consummation of the transaction. In order to backstop the anticipated amount of cash on hand at the consummation of the transaction, on June 15, 2014, IrSub entered into a 60-day senior unsecured cash bridge credit agreement (the “Cash Bridge Credit Agreement” and together with the Bridge Credit Agreement, the “Credit Agreements”) among IrSub, New Medtronic, the lenders from time to time party thereto and Bank of America, N.A. as administrative agent. Under the Cash Bridge Credit Agreement, Bank of America, N.A. has committed to provide IrSub with unsecured financing in an aggregate principal amount of up to $13,500,000,000 for a 60-day period. New Medtronic has also guaranteed the obligations of IrSub under the Cash Bridge Credit Agreement and has agreed to cause each of Medtronic and Covidien to provide additional guarantees of such obligations following the consummation of the transaction. IrSub is not currently planning to draw funds under the Cash Bridge Credit Agreement. Instead, IrSub expects to obtain intercompany loans on arm’s length terms from certain Medtronic affiliates using proceeds of the liquidation of cash equivalents by such Medtronic affiliates. If IrSub draws loans under the Cash Bridge Credit Agreement, such loans would be expected to be repaid from the proceeds of intercompany loans on arm’s length terms from certain Medtronic affiliates using proceeds from the liquidation of cash equivalents by such Medtronic affiliates.

Perella Weinberg, financial advisor to Medtronic, is satisfied that sufficient resources are available to satisfy in full the cash consideration payable to Covidien shareholders under the terms of the acquisition.

For a full description of the financing relating to the business, see “Financing Relating to the Transaction” beginning on page [] of this joint proxy statement/prospectus.

Accounting Treatment of the Transaction (Page []) 

Medtronic will account for the acquisition pursuant to the Transaction Agreement using the acquisition method of accounting in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Medtronic will measure the assets acquired and liabilities assumed at their fair values including net tangible and identifiable intangible assets acquired and liabilities assumed as of the closing of the transaction. Any excess of the purchase price over those fair values will be recorded as goodwill.

Definite lived intangible assets will be amortized over their estimated useful lives. Intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually. All intangible assets and goodwill are also tested for impairment when certain indicators are present.

The purchase price reflected in the unaudited pro forma condensed combined financial statements is based on preliminary estimates using assumptions Medtronic management believes are reasonable based on currently available information. The final purchase price and fair value assessment of assets and liabilities will be based in part on a detailed valuation which has not yet been completed.

 

 

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Comparison of the Rights of Holders of Medtronic Common Shares and New Medtronic Ordinary Shares (Page []) 

As a result of the transaction, the holders of Medtronic common shares will become holders of New Medtronic ordinary shares and their rights will be governed by Irish law (instead of the MBCA) and by the memorandum and articles of association of New Medtronic (instead of Medtronic’s articles of incorporation and bylaws). The current memorandum and articles of association of New Medtronic will be amended and restated as of the completion of the transaction in substantially the form as set forth in Annex D to this joint proxy statement/prospectus. Following the transaction, former Medtronic shareholders may have different rights as New Medtronic shareholders than they had as Medtronic shareholders. Material differences between the rights of shareholders of Medtronic and the rights of shareholders of New Medtronic include differences with respect to, among other things, distributions, dividends, repurchases and redemptions, dividends in shares / bonus issues, the election of directors, the removal of directors, the fiduciary and statutory duties of directors, conflicts of interests of directors, the indemnification of directors and officers, limitations on director liability, the convening of annual meetings of shareholders and special shareholder meetings, notice provisions for meetings, the adjournment of shareholder meetings, the exercise of voting rights, shareholder action by written consent, shareholder suits, shareholder approval of certain transactions, rights of dissenting shareholders, anti-takeover measures and provisions relating to the ability to amend the articles of association. For a summary of the material differences between the rights of Medtronic shareholders and New Medtronic shareholders, see “Description of New Medtronic Ordinary Shares” beginning on page [] of this joint proxy statement/prospectus and “Comparison of the Rights of Holders of Medtronic Common Shares and New Medtronic Ordinary Shares” beginning on page [] of this joint proxy statement/prospectus.

Comparison of the Rights of Holders of Covidien Ordinary Shares and New Medtronic Ordinary Shares (Page []) 

As a result of the transaction, the holders of Covidien ordinary shares will become holders of New Medtronic ordinary shares and their rights will be governed by the memorandum and articles of association of New Medtronic instead of Covidien’s memorandum and articles of association. The current memorandum and articles of association of New Medtronic will be amended and restated as of the completion of the transaction in substantially the form as set forth in Annex D to this joint proxy statement/prospectus. Following the transaction, former Covidien shareholders may have different rights as New Medtronic shareholders than they had as Covidien shareholders. Material differences between the rights of New Medtronic shareholders following the transaction and the rights of Covidien shareholders before the transaction include, among other things, differences with respect to repurchases and redemptions, calls on shares and forfeiture of shares, determinations of the size of the New Medtronic board of directors, the convening of extraordinary shareholder meetings, notices required to make nominations of directors or bring other business in front of shareholder meetings, record dates of shareholder meetings, quorums at shareholder meetings, adjournments of shareholder meetings, the shareholder vote required to approve variations of class rights, the shareholder vote required to approve certain transactions and certain amendments to the articles of association and the inclusion of certain provisions regarding business combinations, control share acquisitions and fair price requirements in tender offers. For a summary of the material differences between the rights of Covidien shareholders and New Medtronic shareholders, see “Description of New Medtronic Ordinary Shares” beginning on page [] of this joint proxy statement/prospectus and “Comparison of the Rights of Holders of Covidien Ordinary Shares and New Medtronic Ordinary Shares” beginning on page [] of this joint proxy statement/prospectus.

 

 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference into this joint proxy statement/prospectus, you should consider carefully the following risk factors, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements.” You should also read and consider the risks associated with the business of Medtronic and the risks associated with the business of Covidien because these risks will also affect New Medtronic. The risks associated with the business of Medtronic can be found below in the section entitled “Risk Factors—Risks Relating to Medtronic’s Business.” The risks associated with the business of Covidien can be found in the Covidien Annual Report on Form 10-K for the fiscal year ended September 27, 2013, which is incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

Risks Relating to the Transaction

The number of New Medtronic ordinary shares that New Medtronic will issue to Covidien shareholders as a result of the acquisition will be based on a fixed exchange ratio. The value of each New Medtronic ordinary share that New Medtronic will issue to Covidien shareholders as a result of the acquisition could be different than at the time Covidien shareholders vote to approve the scheme and Medtronic shareholders vote to adopt the plan of merger contained in the Transaction Agreement.

Upon completion of the transaction, Covidien ordinary shareholders (other than Medtronic or any of its affiliates) will receive (i) $35.19 in cash and (ii) 0.956 of a New Medtronic ordinary share for each Covidien ordinary share they hold. The number of New Medtronic ordinary shares that New Medtronic will issue to Covidien shareholders as a result of the acquisition will not be adjusted in the event of any increase or decrease in the share price of either Medtronic common shares or Covidien ordinary shares between the time the Covidien shareholders vote to approve the scheme and the completion time of the transaction or between the time Medtronic shareholders vote to adopt the plan of merger contained in the Transaction Agreement and the completion time of the transaction.

The market value of each New Medtronic ordinary share that New Medtronic will issue to Covidien shareholders as a result of the acquisition could vary significantly from the market value of Medtronic common shares on the date of this joint proxy statement/prospectus or the date of the Covidien special meetings. Because the exchange ratio will not be adjusted to reflect any changes in the market value of Medtronic common shares or Covidien ordinary shares, such market price fluctuations may affect the value that Covidien shareholders will receive upon completion of the transaction. Share price changes may result from a variety of factors, including changes in the business, operations or prospects of Medtronic or Covidien, market assessments of the likelihood that the transaction will be completed, the timing of the transaction, regulatory considerations, general market and economic conditions and other factors. Shareholders are urged to obtain current market quotations for Medtronic common shares and Covidien ordinary shares. See the section entitled “Comparative Per Share Market Price Data and Dividend Information” beginning on page [] for additional information on the market value of Medtronic common shares and Covidien ordinary shares.

Medtronic and Covidien must obtain certain approvals and governmental and regulatory consents to consummate the transaction, which, if delayed, not granted or granted with unacceptable conditions, may jeopardize or delay the consummation of the acquisition or the merger, result in additional expenditures of money and resources and/or reduce the anticipated benefits of the transaction.

The merger and the acquisition are subject to customary closing conditions. These closing conditions include, among others, the receipt of required approvals of Medtronic and Covidien shareholders, the effectiveness of the registration statement of which this joint proxy statement/prospectus forms a part, the approval of the scheme of arrangement by the Irish High Court and the expiration or termination of the waiting period under the HSR Act, and the relevant clearances under the antitrust, competition and foreign investment laws of the European Commission, Canada, China, Israel, Japan, Russia, South Korea, and Turkey under which filings or clearances are or may be required.

 

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The governmental agencies from which the parties will seek certain of these clearances have broad discretion in administering the governing regulations. As a condition to their clearance of the merger and the acquisition, agencies may impose requirements, limitations or costs or require divestitures or place restrictions on the conduct of New Medtronic’s business after the closing. These requirements, limitations, costs, divestitures or restrictions could jeopardize or delay the consummation of the transaction or may reduce the anticipated benefits of the transaction. Further, no assurance can be given that the required shareholder approvals will be obtained or that the required closing conditions will be satisfied, and, if all required consents and approvals are obtained and the closing conditions are satisfied, no assurance can be given as to the terms, conditions and timing of the approvals. If Medtronic and Covidien agree to any material requirements, limitations, costs, divestitures or restrictions in order to obtain any approvals required to consummate the merger or the acquisition, these requirements, limitations, costs, divestitures or restrictions could adversely affect New Medtronic’s ability to integrate Medtronic’s operations with Covidien’s operations or reduce the anticipated benefits of the transaction. This could result in a failure to consummate the transaction or have a material adverse effect on New Medtronic’s business and results of operations.

The Transaction Agreement contains provisions that limit Covidien’s ability to pursue alternatives to the transactions and, in specified circumstances, could require Covidien to reimburse certain of Medtronic’s expenses.

Under the Transaction Agreement, Covidien is restricted, subject to certain exceptions, from soliciting, knowingly encouraging or negotiating, or furnishing information with regard to, any inquiry, proposal or offer for a competing acquisition proposal with any person. Covidien may terminate the Transaction Agreement and enter into an agreement with respect to a superior proposal only if specified conditions have been satisfied, including a determination by the Covidien board of directors (after consultation with Covidien’s financial advisor and legal counsel) that such proposal is more favorable to the Covidien shareholders than the transaction, and such a termination would result in Covidien being required to reimburse certain of Medtronic’s expenses under the expenses reimbursement agreement. These provisions could discourage a third party that may have an interest in acquiring all or a significant part of Covidien from considering or proposing that acquisition, even if such third party were prepared to pay consideration with a higher value than the value of the scheme consideration.

Failure to consummate the transaction could negatively impact the share price and the future business and financial results of Medtronic and/or Covidien.

If the transaction is not consummated, the ongoing businesses of Medtronic and/or Covidien may be adversely affected and, without realizing any of the potential benefits of having consummated the transaction, Medtronic and/or Covidien will be subject to a number of risks, including the following:

 

  Medtronic and/or Covidien will be required to pay certain costs and expenses relating to the proposed transaction;

 

  if the Transaction Agreement is terminated under specified circumstances, Covidien may be obligated to reimburse certain expenses of Medtronic, in an amount up to approximately $429 million;

 

  if the Transaction Agreement is terminated under specified circumstances, Medtronic may be required to pay to Covidien a termination fee equal to $850 million;

 

  matters relating to the transaction (including integration planning) may require substantial commitments of time and resources by Medtronic management and Covidien management, which could otherwise have been devoted to other opportunities that may have been beneficial to Medtronic or Covidien, as the case may be;

 

  the Transaction Agreement restricts Medtronic and Covidien, without the other party’s consent and subject to certain exceptions, from making certain acquisitions and taking other specified actions until the merger and the acquisition occur or the Transaction Agreement terminates. These restrictions may prevent Medtronic and Covidien from pursuing otherwise attractive business opportunities and making other changes to their businesses that may arise prior to completion of the merger and the acquisition or termination of the Transaction Agreement; and

 

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  Medtronic or Covidien also could be subject to litigation related to any failure to consummate the transaction or related to any enforcement proceeding commenced against Medtronic or Covidien to perform their respective obligations under the Transaction Agreement.

If the transaction is not consummated, these risks may materialize and may adversely affect Medtronic’s or Covidien’s business, financial results and share price.

Medtronic’s and Covidien’s directors and executive officers have interests in the transaction that are in addition to, or different from, any interests they might have as shareholders.

In considering the recommendations of the Medtronic and Covidien boards of directors, Medtronic and Covidien shareholders should be aware that directors and executive officers of Medtronic and Covidien, respectively, have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders, the aggregate values of which we estimate to be approximately $[—] for Medtronic’s directors and executive officers and approximately $[—] for Covidien’s directors and executive officers (exclusive of any applicable tax gross-up). For more information, including the assumptions used to estimate the value of such interests, please see “The Transaction—Interests of Certain Persons in the Transaction” beginning on page []. You should consider these interests in connection with your vote on the related proposals.

The Transaction Agreement contains provisions that limit Medtronic’s ability to pursue alternatives to the transaction and, in specified circumstances, could require Medtronic to pay a termination fee to Covidien.

Under the Transaction Agreement, Medtronic is restricted, subject to certain exceptions, from soliciting, knowingly encouraging or negotiating, or furnishing information with regard to, any inquiry, proposal or offer for a competing acquisition proposal with any person. In addition, Medtronic may not terminate the Transaction Agreement to enter into any agreement with respect to a superior proposal. In the event that the Medtronic board of directors changes its recommendation that Medtronic’s shareholders adopt the plan of merger contained in the Transaction Agreement and Medtronic’s shareholders do not, at the Medtronic special meeting, vote to adopt the plan of merger contained in the Transaction Agreement, Medtronic could be required to pay Covidien a termination fee of $850 million if certain other conditions are satisfied. These provisions may have the effect of increasing the cost to Medtronic if the Medtronic board of directors changes its recommendation that Medtronic’s shareholders adopt the plan of merger contained in the Transaction Agreement and these provisions could also discourage a third party that may have an interest in acquiring all or a significant part of Medtronic from considering or proposing that acquisition, even if such third party were willing to pay consideration with a higher value than the merger consideration.

While the transaction is pending, Medtronic and Covidien will be subject to business uncertainties that could adversely affect their businesses.

Uncertainty about the effect of the transaction on employees, customers and suppliers may have an adverse effect on Medtronic and Covidien and, consequently, on New Medtronic. These uncertainties may impair Medtronic’s and Covidien’s ability to attract, retain and motivate key personnel until the merger and the acquisition are consummated and for a period of time thereafter, and could cause customers, suppliers and others who deal with Medtronic and Covidien to seek to change or terminate existing business relationships with Medtronic and Covidien. Employee retention may be particularly challenging during the pendency of the transaction because employees may experience uncertainty about their future roles with New Medtronic. If, despite Medtronic’s and Covidien’s retention efforts, key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with New Medtronic, New Medtronic’s business could be seriously harmed.

 

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Risks Relating to the Businesses of the Combined Company

We may not realize all of the anticipated benefits of the transaction or those benefits may take longer to realize than expected. We may also encounter significant unexpected difficulties in integrating the two businesses.

Our ability to realize the anticipated benefits of the transaction will depend, to a large extent, on our ability to integrate the Medtronic and Covidien businesses. The combination of two independent businesses is a complex, costly and time-consuming process. As a result, we will be required to devote significant management attention and resources to integrating the business practices and operations of Medtronic and Covidien. The integration process may disrupt the businesses and, if implemented ineffectively or if impacted by unforeseen negative economic or market conditions or other factors, we may not realize the full anticipated benefits of the transaction. Our failure to meet the challenges involved in integrating the two businesses to realize the anticipated benefits of the transaction could cause an interruption of, or a loss of momentum in, the activities of New Medtronic and could adversely affect New Medtronic’s results of operations.

In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, loss of customer relationships, and diversion of management’s attention. The difficulties of combining the operations of the companies include, among others:

 

  the diversion of management’s attention to integration matters;

 

  difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from combining the business of Covidien with that of Medtronic;

 

  difficulties in the integration of operations and systems;

 

  difficulties in the assimilation of employees;

 

  difficulties in managing the expanded operations of a significantly larger and more complex company;

 

  challenges in keeping existing customers and obtaining new customers; and

 

  challenges in attracting and retaining key personnel.

Many of these factors will be outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially impact the business, financial condition and results of operations of New Medtronic. In addition, even if the operations of the businesses of Medtronic and Covidien are integrated successfully, we may not realize the full benefits of the transaction, including the synergies, cost savings or sales or growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all. Furthermore, additional unanticipated costs may be incurred in the integration of the businesses of Medtronic and Covidien. All of these factors could negatively impact the earnings per share of New Medtronic, decrease or delay the expected accretive effect of the transaction, and negatively impact the price of New Medtronic’s ordinary shares. As a result, we cannot assure you that the combination of the Medtronic and Covidien businesses will result in the realization of the full benefits anticipated from the transaction.

As a result of the transaction, New Medtronic will incur direct and indirect costs.

New Medtronic will incur costs and expenses in connection with and as a result of the transaction. These costs and expenses include professional fees to comply with Irish corporate and tax laws and financial reporting requirements, costs and expenses incurred in connection with holding a majority of the meetings of the New Medtronic board of directors and certain executive management meetings in Ireland, as well as any additional costs New Medtronic may incur going forward as a result of its new corporate structure. These costs are likely to exceed the costs historically borne by Medtronic and Covidien and may be greater than expected.

 

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Medtronic’s and Covidien’s actual financial positions and results of operations may differ materially from the unaudited pro forma financial data included in this joint proxy statement/prospectus.

The pro forma financial information contained in this joint proxy statement/prospectus are presented for illustrative purposes only and may not be an indication of what New Medtronic’s financial position or results of operations would have been had the transaction been completed on the dates indicated. The pro forma financial information has been derived from the audited and unaudited historical financial statements of Medtronic and Covidien and certain adjustments and assumptions have been made regarding the combined company after giving effect to the transaction. The assets and liabilities of Covidien have been measured at fair value based on various preliminary estimates using assumptions that Medtronic management believes are reasonable utilizing information currently available. The process for estimating the fair value of acquired assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates. These estimates may be revised as additional information becomes available and as additional analyses are performed. Differences between preliminary estimates in the pro forma financial information and the final acquisition accounting will occur and could have a material impact on the pro forma financial information and the combined company’s financial position and future results of operations.

In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect New Medtronic’s financial condition or results of operations following the closing. Any potential decline in New Medtronic’s financial condition or results of operations may cause significant variations in the share price of New Medtronic. Please see “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page [].

Disruption in the financial markets could affect New Medtronic’s ability to refinance the bridge loan on favorable terms, or at all.

If and to the extent drawn, New Medtronic is obligated to repay its $2,800,000,000 Bridge Credit Agreement within 364 days after the consummation of the transaction and IrSub is obligated to pay its $13,500,000,000 Cash Bridge Credit Agreement within 60 days after the consummation of the transaction. Disruptions in the commercial credit markets or uncertainty in the United States, European Union or elsewhere could result in a tightening of financial markets. As a result of financial market turmoil, neither New Medtronic nor IrSub may be able to obtain alternate financing in order to repay the bridge loan facilities, or refinance the bridge loans entered into in connection with this transaction on favorable terms (or at all).

If New Medtronic or IrSub is unable to successfully obtain alternative financing or refinance the bridge loans at favorable terms and conditions (including but not limited to pricing and other fee payments), this could result in additional costs to New Medtronic and IrSub. If New Medtronic or IrSub is unable to obtain alternate financing or refinance at all, New Medtronic and IrSub will have to repay all outstanding amounts under the bridge loan facilities on their respective maturity dates.

New Medtronic’s substantial leverage and debt service obligations could adversely affect New Medtronic’s business.

New Medtronic and IrSub have each secured a bridge financing commitment that together have an aggregate commitment amount of $16,300,000,000 from Bank of America, N.A. to finance the cash portion of the acquisition. Neither New Medtronic nor IrSub currently plans to draw funds under the bridge loan facilities. New Medtronic currently plans to refinance the Bridge Credit Agreement through a new debt issuance and IrSub expects to obtain an intercompany loan on arm’s length terms from certain Medtronic affiliates using proceeds from the liquidation of cash equivalents by such Medtronic affiliates. After giving effect to the merger and the acquisition, New Medtronic expects to have total external debt of approximately $[—] billion.

 

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The degree to which New Medtronic will be leveraged following the transaction could have important consequences to shareholders of New Medtronic, including, but not limited to, potentially:

 

  increasing New Medtronic’s vulnerability to, and reducing its flexibility to respond to, general adverse economic and industry conditions;

 

  requiring the dedication of a substantial portion of New Medtronic’s cash flow from operations to the payment of principal of, and interest on, indebtedness, including but not limited to payments under the terms of New Medtronic’s expected debt issuance and repayment of a loan or loans to IrSub from New Medtronic subsidiaries, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, joint ventures, product research, dividend share repurchases and development or other general corporate purposes;

 

  limiting New Medtronic’s flexibility in planning for, or reacting to, changes in New Medtronic’s business and the competitive environment and the industry in which it operates;

 

  placing New Medtronic at a competitive disadvantage as compared to its competitors, to the extent that they are not as highly leveraged;

 

  causing the long-term and short-term debt ratings of New Medtronic and its subsidiaries to be lower than the long-term and short-term debt ratings currently applicable to Medtronic and Covidien; and

 

  limiting New Medtronic’s ability to borrow additional funds and increasing the cost of any such borrowing.

Proposed legislation relating to the denial of U.S. federal or state governmental contracts to U.S. companies that redomicile abroad could adversely affect New Medtronic’s business.

Various U.S. federal and state legislative proposals that would deny governmental contracts to U.S. companies that move their corporate location abroad may affect New Medtronic if adopted into law. We are unable to predict the likelihood that any such proposed legislation might become law, the nature of regulations that may be promulgated under any future legislative enactments, or the effect such enactments and increased regulatory scrutiny may have on New Medtronic’s business.

Future potential changes to the tax laws could result in New Medtronic being treated as a U.S. corporation for U.S. federal tax purposes, and if adopted prior to closing, could jeopardize or delay the consummation of the transaction.

Under current law, New Medtronic is expected to be treated as a foreign corporation for U.S. federal tax purposes. Changes to Section 7874 of the Code, or the U.S. Treasury regulations promulgated thereunder, could affect New Medtronic’s status as a foreign corporation for U.S. federal tax purposes. Any such changes could have prospective or retroactive application, and may apply even if enacted after the transaction is consummated. If New Medtronic were to be treated as a U.S. corporation for federal tax purposes, it could be subject to substantially greater U.S. tax liability than currently contemplated as a non-U.S. corporation.

Specifically, if New Medtronic were to be treated as a U.S. corporation for federal tax purposes, New Medtronic would be subject to U.S. corporate income tax on its worldwide income, and the income of its foreign subsidiaries would be subject to U.S. tax when repatriated or when deemed recognized under the U.S. tax rules for controlled foreign subsidiaries, including as a result of such subsidiaries having any investments in U.S. property (within the meaning of Section 956 of the Code) such as stock or debt obligations of U.S. affiliates. In such case, New Medtronic would be subject to substantially greater U.S. tax liability than currently contemplated. Additionally, any restructurings of Covidien and its subsidiaries after the transaction that might be undertaken to rationalize the overall structure of New Medtronic might give rise to U.S. taxable gain. Moreover, in such case, a non-U.S. shareholder of New Medtronic would be subject to U.S. withholding tax on the gross amount of any dividends paid by New Medtronic to such shareholder.

Each of Medtronic’s and Covidien’s respective obligations to consummate the transaction is subject to a condition that there having been no change in applicable law (whether or not such change in law is yet effective)

 

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with respect to Section 7874 of the Code (or any other U.S. tax law), or any official interpretations thereof as set forth in published guidance by the IRS (other than IRS News Releases) (whether or not such change in official interpretation is yet effective), and there having been no bill that would implement such a change which has been passed in identical form (or substantially identical form such that a conference committee is not required prior to submission of such legislation for the President’s approval or veto) by both houses of Congress and for which the time period for the President of the United States to sign or veto such bill has not yet elapsed, in each case prior to closing, that, once effective, in the opinion of nationally recognized U.S. tax counsel, would cause New Medtronic to be treated as a U.S. domestic corporation for U.S. federal income tax purposes.

Since Section 7874 of the Code was enacted, there have been various proposals to broaden the scope of Section 7874 of the Code, including, most recently, (i) a provision in the Obama Administration’s 2015 budget proposals which, if enacted in its present form, would be effective for transactions completed after December 31, 2014, and (ii) proposals introduced by certain Democratic members of both houses of Congress which, if enacted in their present form, would be effective retroactively to any transactions completed after May 8, 2014. Each proposal would, among other things, treat a foreign acquiring corporation as a U.S. corporation under Section 7874 of the Code if the former shareholders of the U.S. corporation own more than 50% of the shares of the foreign acquiring corporation after the transaction, or if the foreign corporation’s affiliated group has substantial business activities in the United States and the foreign corporation is primarily managed and controlled in the United States. These proposals, if enacted in their present form and if made retroactively effective to transactions completed during the period in which the effective time of the transaction occurs, would cause New Medtronic to be treated as a U.S. corporation for U.S. federal tax purposes.

The IRS may not agree with the conclusion that New Medtronic should be treated as a foreign corporation for U.S. federal income tax purposes following the transaction.

A corporation is generally considered a tax resident in the jurisdiction of its organization or incorporation for U.S. federal income tax purposes. Because New Medtronic is an Irish incorporated entity, it would generally be classified as a foreign corporation (and, therefore, a non-U.S. tax resident) under these rules. Even so, the IRS may assert that New Medtronic should be treated as a U.S. corporation (and, therefore, a U.S. tax resident) for U.S. federal income tax purposes pursuant to Section 7874 of the Code.

Under Section 7874 of the Code, if the former shareholders of Medtronic hold 80% or more of the vote or value of the shares of New Medtronic by reason of holding stock in Medtronic (the “ownership test”), and New Medtronic’s expanded affiliated group after the transaction does not have substantial business activities in Ireland relative to its worldwide activities (the “substantial business activities test”), New Medtronic would be treated as a U.S. corporation. Based on the rules for determining share ownership under Section 7874 of the Code, Medtronic shareholders will receive approximately 70% of the ordinary shares of New Medtronic (by both vote and value) by reason of holding stock in Medtronic. Therefore, under current law, New Medtronic should not be treated as a U.S. corporation for U.S. federal income tax purposes.

There can be no assurance that the IRS will agree with the position that the ownership test is satisfied. There is limited guidance regarding the application of Section 7874 of the Code, including with respect to the provisions regarding the application of the ownership test.

In addition, as described in more detail in the risk factor above, new statutory or regulatory provisions under Section 7874 of the Code or otherwise could be enacted or promulgated that adversely affect New Medtronic’s status as a non-U.S. corporation for U.S. federal tax purposes, and any such provisions could have retroactive application.

As described in the risk factor above, if New Medtronic were to be treated as a U.S. corporation for federal tax purposes, it could be subject to substantially greater U.S. tax liability than currently contemplated as a non-U.S. corporation.

 

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See “Material Tax Consequences of the Proposed Transaction—U.S. Federal Income Tax Considerations—U.S. Anti-Inversion Rules” beginning on page [] of this joint proxy statement/prospectus for a more detailed discussion of the application of Section 7874 of the Code to the transaction.

New Medtronic’s tax position may be adversely affected by changes in tax law relating to multinational corporations, or increased scrutiny by tax authorities.

In addition to potential changes to Section 7874 of the Code, recent legislative proposals have aimed to expand the scope of U.S. corporate tax residence, limit the ability of foreign-owned corporations to deduct interest expense, and to make other changes in the taxation of multinational corporations.

Additionally, the U.S. Congress, government agencies in non-U.S. jurisdictions where New Medtronic and its affiliates do business, and the Organisation for Economic Co-operation and Development have recently focused on issues related to the taxation of multinational corporations. One example is in the area of “base erosion and profit shifting,” where profits are claimed to be earned for tax purposes in low-tax jurisdictions, or payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As a result, the tax laws in the U.S., Ireland, and other countries in which New Medtronic and its affiliates do business could change on a prospective or retroactive basis, and any such changes could materially adversely affect New Medtronic.

Moreover, U.S. and foreign tax authorities may carefully scrutinize companies that result from a cross-border business combination, such as New Medtronic, which may lead such authorities to assert that New Medtronic owes additional taxes.

New Medtronic may face potential limitations on the utilization of Medtronic’s (and its U.S. affiliates’) tax attributes following the completion of the transaction.

Following the acquisition of a U.S. corporation by a foreign corporation, Section 7874 of the Code can limit the ability of the acquired U.S. corporation and its U.S. affiliates to utilize U.S. tax attributes (including net operating losses and certain tax credits) to offset U.S. taxable income resulting from certain transactions as more fully described in “Material Tax Consequences of the Proposed Transaction—U.S. Federal Income Tax Considerations—U.S. Anti-Inversion Rules—Potential Limitation on the Utilization of Medtronic’s (and its U.S. Affiliates’) Tax Attributes” beginning on page [] of this joint proxy statement/prospectus. Medtronic currently expects that, following the transaction, this limitation will apply and, as a result, Medtronic and its U.S. affiliates could be limited in their ability to utilize their U.S. tax attributes to offset their U.S. taxable income, if any, resulting from certain specified taxable transactions. Please see “Material Tax Consequences of the Proposed Transaction—U.S. Federal Income Tax Considerations—U.S. Anti-Inversion Rules—Potential Limitation on the Utilization of Medtronic’s (and its U.S. Affiliates’) Tax Attributes” beginning on page [] of this joint proxy statement/prospectus.

New Medtronic will seek Irish High Court approval of the creation of distributable reserves. New Medtronic expects this will be forthcoming, but cannot guarantee this.

Under Irish law, dividends may only be paid and share repurchases and redemptions must generally be funded only out of “distributable reserves,” which New Medtronic will not have immediately following the closing. The creation of distributable reserves of New Medtronic involves a reduction in New Medtronic’s share premium account which requires the approval of the Irish High Court and, in connection with seeking such court approval, the approval of Medtronic and Covidien shareholders is being sought. The approval of the Irish High Court is expected within 15 weeks following the closing. New Medtronic is not aware of any reason why the Irish High Court would not approve the creation of distributable reserves in this manner, however, the issuance of the required order is a matter for the discretion of the Irish High Court. There will also be no guarantee that the approvals by Medtronic and Covidien shareholders will be obtained. In the event that distributable reserves of New Medtronic are not created, no distributions by way of dividends, share repurchases or otherwise will be permitted under Irish law until such time as the group has created sufficient distributable reserves from its business activities.

 

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The New Medtronic ordinary shares to be received by Medtronic and Covidien shareholders in connection with the transaction will have different rights from the Medtronic common shares and the Covidien ordinary shares.

Upon completion of the merger and the acquisition, Medtronic and Covidien shareholders will become New Medtronic shareholders and their rights as shareholders will be governed by New Medtronic’s memorandum and articles of association and Irish law. The rights associated with each of the Medtronic common shares and Covidien ordinary shares are different than the rights associated with New Medtronic ordinary shares. Material differences between the rights of shareholders of Medtronic and the rights of shareholders of New Medtronic include differences with respect to, among other things, distributions, dividends, repurchases and redemptions, dividends in shares / bonus issues, the election of directors, the removal of directors, the fiduciary and statutory duties of directors, conflicts of interests of directors, the indemnification of directors and officers, limitations on director liability, the convening of annual meetings of shareholders and special shareholder meetings, notice provisions for meetings, the adjournment of shareholder meetings, the exercise of voting rights, shareholder action by written consent, shareholder suits, shareholder approval of certain transactions, rights of dissenting shareholders, anti-takeover measures and provisions relating to the ability to amend the articles of association. Material differences between the rights of New Medtronic shareholders following the transaction and the rights of Covidien shareholders before the transaction include, among other things, differences with respect to repurchases and redemptions, calls on shares and forfeiture of shares, determinations of the size of the New Medtronic board of directors, the convening of extraordinary shareholder meetings, notices required to make nominations of directors or bring other business in front of shareholder meetings, record dates of shareholder meetings, quorums at shareholder meetings, adjournments of shareholder meetings, the shareholder vote required to approve variations of class rights, the shareholder vote required to approve certain transactions and certain amendments to the articles of association and the inclusion of certain provisions regarding business combinations, control share acquisitions and fair price requirements in tender offers. See “Comparison of the Rights of Holders of Medtronic Common Shares and New Medtronic Ordinary Shares” beginning on page [] and “Comparison of the Rights of Holders of Covidien Ordinary Shares and New Medtronic Ordinary Shares” beginning on page [].

As a result of different shareholder voting requirements in Ireland relative to Minnesota, New Medtronic will have less flexibility with respect to certain aspects of capital management than Medtronic currently has.

Under Minnesota law and Medtronic’s articles, Medtronic’s directors may issue, without shareholder approval or any preemptive rights, any shares authorized by its articles of incorporation that are not already issued.

Under Irish law, New Medtronic’s directors may issue new ordinary or preferred shares up to a maximum amount equal to the authorized but unissued share capital, without shareholder approval, once authorized to do so by the memorandum and articles of association of New Medtronic or by an ordinary resolution of the New Medtronic shareholders. Additionally, subject to specified exceptions, Irish law grants statutory preemption rights to existing shareholders to subscribe for new issuances of shares for cash, but allows shareholders to waive their statutory preemption rights by way of special resolution with respect to any particular allotment of shares or generally, subject to a five year limit on such waiver. Accordingly, New Medtronic’s articles of association contain, as permitted by Irish company law, a provision authorizing the board to issue new shares for cash without offering preemption rights. The authorization of the directors to issue shares without further shareholder approval and the authorization of the waiver of the statutory preemption rights must both be renewed by the shareholders at least every five years, and Medtronic cannot provide any assurance that these authorizations will always be approved, which could limit New Medtronic’s ability to issue equity and thereby adversely affect the holders of New Medtronic securities. While Medtronic does not believe that the differences between Minnesota law and Irish law relating to New Medtronic’s capital management will have an adverse effect on New Medtronic, situations may arise where the flexibility Medtronic now has under Minnesota law would have provided benefits to New Medtronic shareholders that will not be available under Irish law. Please see “Comparison of the Rights of Holders of Medtronic Common Shares and New Medtronic Ordinary Shares” beginning on page [].

 

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The transaction may not allow us to maintain competitive global cash management and a low effective corporate tax rate.

We believe that the transaction should give New Medtronic the ability to maintain competitive global cash management and a competitive worldwide effective corporate tax rate. We cannot give any assurance as to what New Medtronic’s effective tax rate will be after the transaction, however, because of, among others, uncertainty regarding the tax policies of the jurisdictions where New Medtronic will operate. New Medtronic’s actual effective tax rate may vary from this expectation and that variance may be material. Additionally, the tax laws of Ireland and other jurisdictions could change in the future, and such changes could cause a material change in New Medtronic’s effective tax rate.

Following the completion of the transaction, a future transfer of your New Medtronic shares, other than one effected by means of the transfer of book-entry interests in the Depository Trust Company, may be subject to Irish stamp duty.

Transfers of New Medtronic shares effected by means of the transfer of book entry interests in the Depository Trust Company (“DTC”) will not be subject to Irish stamp duty. It is anticipated that the majority of New Medtronic shares will be traded through DTC by brokers who hold such shares on behalf of customers. However, if you hold your New Medtronic shares directly rather than beneficially through DTC, any transfer of your New Medtronic shares could be subject to Irish stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of the shares acquired). Payment of Irish stamp duty is generally a legal obligation of the transferee. The potential for stamp duty could adversely affect the price of your shares. Note, however, that transfers of Covidien shares are currently subject to the same potential liability to Irish stamp duty in circumstances similar to those in which Irish stamp duty may be payable in respect of New Medtronic shares. Please see “Material Tax Consequences of the Proposed Transaction—Irish Tax Considerations—Stamp Duty” beginning on page [].

In certain limited circumstances, dividends paid by New Medtronic may be subject to Irish dividend withholding tax.

In certain limited circumstances, dividend withholding tax (currently at a rate of 20%) may arise in respect of dividends paid on New Medtronic shares. A number of exemptions from dividend withholding tax exist such that shareholders resident in the U.S. and shareholders resident in the countries listed in Annex G attached to this joint proxy statement/prospectus may be entitled to exemptions from dividend withholding tax.

Please see “ Material Tax Consequences of the Proposed Transaction—Irish Tax Considerations—Withholding Tax on Dividends” beginning on page [] and, in particular, please note the requirement to complete certain dividend withholding tax forms in order to qualify for many of the exemptions.

Shareholders resident in the U.S. that hold their shares through DTC will not be subject to dividend withholding tax provided the addresses of the beneficial owners of such shares in the records of the brokers holding such shares are recorded as being in the U.S. (and such brokers have further transmitted the relevant information to a qualifying intermediary appointed by New Medtronic). However, other shareholders may be subject to dividend withholding tax, which could adversely affect the price of their shares. Note, however, that dividends currently paid on the Covidien shares are subject to similar Irish dividend withholding tax implications and procedures as dividends which will be paid on New Medtronic shares. Please see “Material Tax Consequences of the Proposed Transaction—Irish Tax Considerations—Withholding Tax on Dividends” beginning on page [].

After the transaction, dividends received by Irish residents and certain other shareholders may be subject to Irish income tax.

Shareholders entitled to an exemption from Irish dividend withholding tax on dividends received from New Medtronic will not be subject to Irish income tax in respect of those dividends, unless they have some connection

 

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with Ireland other than their shareholding in New Medtronic (for example, they are resident in Ireland). Shareholders who receive dividends subject to Irish dividend withholding tax will generally have no further liability to Irish income tax on those dividends. Note that similar Irish income tax considerations currently apply to the holders of Covidien shares. Please see “Material Tax Consequences of the Proposed Transaction—Irish Tax Considerations—Income Tax on Dividends Paid on New Medtronic Shares” beginning on page [].

New Medtronic shares received by means of a gift or inheritance could be subject to Irish capital acquisitions tax.

Irish capital acquisitions tax (“CAT”) could apply to a gift or inheritance of New Medtronic shares irrespective of the place of residence, ordinary residence or domicile of the parties. This is because New Medtronic shares will be regarded as property situated in Ireland. The person who receives the gift or inheritance has primary liability for CAT. Gifts and inheritances passing between spouses are exempt from CAT. Children have a tax-free threshold of €225,000 in respect of taxable gifts or inheritances received from their parents. Note that Covidien ordinary shares are also regarded as property situated in Ireland for CAT purposes and the same CAT considerations also currently apply to holders of Covidien ordinary shares. Please see “Material Tax Consequences of the Proposed Transaction—Irish Tax Considerations—Capital Acquisitions Tax” beginning on page [].

It is recommended that each shareholder consult his or her own tax advisor as to the tax consequences of holding shares in and receiving dividends from New Medtronic.

Risks Relating to Medtronic’s Business

As used in this “Risks Relating to Medtronic’s Business” section, references to the “company” refer to Medtronic (and not, for the avoidance of doubt, to Covidien or New Medtronic).

The medical device industry is highly competitive and Medtronic may be unable to compete effectively.

Medtronic competes in both the therapeutic and diagnostic medical markets in more than 140 countries throughout the world. These markets are characterized by rapid change resulting from technological advances and scientific discoveries. In the product lines in which Medtronic competes, Medtronic faces a mixture of competitors ranging from large manufacturers with multiple business lines to small manufacturers that offer a limited selection of niche products. Development by other companies of new or improved products, processes, or technologies may make Medtronic’s products or proposed products less competitive. In addition, Medtronic faces competition from providers of alternative medical therapies such as pharmaceutical companies. Competitive factors include:

 

    product reliability;

 

    product performance;

 

    product technology;

 

    product quality;

 

    breadth of product lines;

 

    product services;

 

    customer support;

 

    price; and

 

    reimbursement approval from health care insurance providers.

Major shifts in industry market share have occurred in connection with product problems, physician advisories, safety alerts, and publications about Medtronic’s products, reflecting the importance of product quality, product efficacy, and quality systems in the medical device industry. In the current environment of managed care, consolidation among health care providers, increased competition, and declining reimbursement

 

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rates, Medtronic has been increasingly required to compete on the basis of price. In order to continue to compete effectively, Medtronic must continue to create, invest in, or acquire advanced technology, incorporate this technology into Medtronic’s proprietary products, obtain regulatory approvals in a timely manner, and manufacture and successfully market Medtronic’s products. Given these factors, Medtronic cannot guarantee that the company will be able to continue its level of success in the industry.

Reduction or interruption in supply and an inability to develop alternative sources for supply may adversely affect Medtronic’s manufacturing operations and related product sales.

Medtronic manufactures most of its products at 41 manufacturing facilities located throughout the world. Medtronic purchases many of the components and raw materials used in manufacturing these products from numerous suppliers in various countries. Generally Medtronic has been able to obtain adequate supplies of such raw materials and components. However, for reasons of quality assurance, cost effectiveness, or availability, Medtronic procures certain components and raw materials from a sole supplier. Medtronic works closely with the company’s suppliers to try to ensure continuity of supply while maintaining high quality and reliability. However, Medtronic cannot guarantee that these efforts will be successful. In addition, due to the stringent regulations and requirements of the U.S. Food and Drug Administration (the “U.S. FDA”) regarding the manufacture of Medtronic’s products, Medtronic may not be able to quickly establish additional or replacement sources for certain components or materials. A reduction or interruption in supply, and an inability to develop alternative sources for such supply, could adversely affect Medtronic’s ability to manufacture the company’s products in a timely or cost-effective manner and to make the company’s related product sales. Moreover, pursuant to the conflict minerals requirements promulgated by the SEC as a part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), Medtronic is required to report on the source of any conflict minerals used in the company’s products, as well as the process Medtronic uses to determine the source of such materials. Medtronic will incur expenses as the company works with its suppliers to evaluate the source of any conflict minerals in the company’s products, and compliance with these requirements could adversely affect the sourcing, supply, and pricing of the company’s raw materials.

Medtronic’s industry is experiencing greater scrutiny and regulation by governmental authorities, which may lead to greater regulation in the future.

Medtronic’s medical devices and Medtronic’s business activities are subject to rigorous regulation, including by the U.S. FDA, the U.S. Department of Justice (“DOJ”), and numerous other federal, state, and foreign governmental authorities. These authorities and members of Congress have been increasing their scrutiny of Medtronic’s industry. For example, Medtronic has received inquiries from members of Congress and other government agencies regarding a variety of matters. In addition, certain state governments and the federal government have enacted legislation aimed at increasing transparency of Medtronic’s interactions with health care providers. As a result, Medtronic is required by law to disclose payments and other transfers of value to health care providers licensed by certain states and, starting with payments or other transfers of value made on or after August 1, 2013, to all U.S. physicians and U.S. teaching hospitals at the federal level. Any failure to comply with these legal and regulatory requirements could impact Medtronic’s business. In addition, Medtronic may continue to devote substantial additional time and financial resources to further develop and implement policies, systems, and processes to comply with enhanced legal and regulatory requirements, which may also impact Medtronic’s business. Medtronic anticipates that governmental authorities will continue to scrutinize Medtronic’s industry closely, and that additional regulation may increase compliance and legal costs, exposure to litigation, and other adverse effects to Medtronic’s operations.

Medtronic is subject to many laws and governmental regulations and any adverse regulatory action may materially adversely affect its financial condition and business operations.

Medtronic’s medical devices are subject to regulation by numerous government agencies, including the U.S. FDA and comparable agencies outside the U.S. To varying degrees, each of these agencies requires Medtronic to comply with laws and regulations governing the development, testing, manufacturing, labeling, marketing, and

 

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distribution of Medtronic’s medical devices. Medtronic cannot guarantee that the company will be able to obtain marketing clearance for its new products or enhancements or modifications to existing products. If such approval is obtained, it may:

 

    take a significant amount of time;

 

    require the expenditure of substantial resources;

 

    involve stringent clinical and pre-clinical testing, as well as increased post-market surveillance;

 

    involve modifications, repairs, or replacements of Medtronic’s products; and

 

    result in limitations on the proposed uses of Medtronic’s products.

Both before and after a product is commercially released, Medtronic has ongoing responsibilities under U.S. FDA regulations. Medtronic is also subject to periodic inspections by the U.S. FDA to determine compliance with the U.S. FDA’s requirements, including primarily the quality system regulations and medical device reporting regulations. The results of these inspections can include inspectional observations on U.S. FDA’s Form-483, warning letters, or other forms of enforcement. Since 2009, the U.S. FDA has significantly increased its oversight of companies subject to its regulations, including medical device companies, by hiring new investigators and stepping up inspections of manufacturing facilities. The U.S. FDA has recently also significantly increased the number of warning letters issued to companies. If the U.S. FDA were to conclude that Medtronic is not in compliance with applicable laws or regulations, or that any of Medtronic’s medical devices are ineffective or pose an unreasonable health risk, the U.S. FDA could ban such medical devices, detain or seize adulterated or misbranded medical devices, order a recall, repair, replacement, or refund of such devices, refuse to grant pending pre-market approval applications or require certificates of foreign governments for exports, and/or require Medtronic to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health. The U.S. FDA may also impose operating restrictions on a company-wide basis, enjoin and/or restrain certain conduct resulting in violations of applicable law pertaining to medical devices, and assess civil or criminal penalties against Medtronic’s officers, employees, or the company itself. The U.S. FDA may also recommend prosecution to the DOJ. Any adverse regulatory action, depending on its magnitude, may restrict Medtronic from effectively marketing and selling its products.

In addition, device manufacturers are permitted to promote products solely for the uses and indications set forth in the approved product labeling. A number of enforcement actions have been taken against manufacturers that promote products for “off-label” uses, including actions alleging that federal health care program reimbursement of products promoted for “off-label” uses are false and fraudulent claims to the government. The failure to comply with “off-label” promotion restrictions can result in significant administrative obligations and costs, and potential penalties from, and/or agreements with, the federal government.

Pursuant to Dodd-Frank, the SEC promulgated final rules regarding disclosure of the use of certain minerals, known as “conflict minerals”: tantalum, tin, tungsten (or their ores), and gold; which are mined from the Democratic Republic of the Congo and adjoining countries. Under the rules, Medtronic is now required to disclose the procedures the company employs to determine the sourcing of such minerals and metals produced from those minerals. There are costs associated with complying with these disclosure requirements, including for diligence in regards to the sources of any conflict minerals used in Medtronic’s products, in addition to the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities. In addition, the implementation of these rules could adversely affect the sourcing, supply, and pricing of materials used in Medtronic’s products. As of the date of Medtronic’s conflict minerals report for the 2013 calendar year, Medtronic was unable to obtain the necessary information on conflict minerals from all of Medtronic’s suppliers and were unable to determine that all of Medtronic’s products are conflict free. Medtronic may continue to face difficulties in gathering this information in the future. Medtronic may face reputational challenges if the company determines that certain of its products contain minerals not determined to be conflict free or if Medtronic is unable to sufficiently verify the origins for all conflict minerals used in the company’s products through the procedures it implements.

 

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Foreign governmental regulations have become increasingly stringent and more common, and Medtronic may become subject to more rigorous regulation by foreign governmental authorities in the future. Penalties for a company’s non-compliance with foreign governmental regulation could be severe, including revocation or suspension of a company’s business license and criminal sanctions. Any domestic or foreign governmental law or regulation imposed in the future may have a material adverse effect on Medtronic. Medtronic’s worldwide operations are also required to comply with the U.S. Foreign Corrupt Practices Act (“FCPA”) and similar anti-bribery laws in other jurisdictions and with U.S. and foreign export control, trade embargo and customs laws. If Medtronic fails to comply with them, the company could suffer civil and/or criminal sanctions.

Medtronic is also subject to various environmental laws and regulations both within and outside the U.S. Medtronic’s operations involve the use of substances regulated under environmental laws, primarily those used in manufacturing and sterilization processes. Medtronic cannot guarantee that compliance with environmental protection laws and regulations will not have a material impact on Medtronic’s consolidated earnings, financial condition, and/or cash flows.

Medtronic’s failure to comply with rules relating to reimbursement and regulation of health care goods and services may subject Medtronic to penalties and adversely impact Medtronic’s reputation and business operations.

Medtronic’s devices and therapies are subject to regulation regarding quality and cost by the U.S. Department of Health and Human Services (“HHS”), including the Centers for Medicare & Medicaid Services (“CMS”) as well as comparable state and non-U.S. agencies responsible for reimbursement and regulation of health care goods and services. U.S. federal government health care laws apply when Medtronic submits a claim on behalf of a U.S. federal health care program beneficiary, or when a customer submits a claim for an item or service that is reimbursed under a U.S. federal government-funded health care program, such as Medicare or Medicaid. The principal U.S. federal laws implicated include those that prohibit the filing of false or improper claims for federal payment, known as the false claims laws; those that prohibit unlawful inducements for the referral of business reimbursable under federally-funded health care programs, known as the anti-kickback laws; and that which prohibits health care service providers seeking reimbursement for providing certain services to a patient who was referred by a physician who has certain types of direct or indirect financial relationships with the service provider, known as the Stark law.

The laws applicable to Medtronic are subject to evolving interpretations. If a governmental authority were to conclude that Medtronic is not in compliance with applicable laws and regulations, Medtronic and its officers and employees could be subject to severe criminal and civil penalties, including, for example, exclusion from participation as a supplier of product to beneficiaries covered by CMS. If Medtronic is excluded from participation based on such an interpretation it could adversely affect the company’s reputation and business operations.

Quality problems with Medtronic’s processes, goods, and services could harm the company’s reputation for producing high-quality products and erode the company’s competitive advantage, sales, and market share.

Quality is extremely important to Medtronic and Medtronic’s customers due to the serious and costly consequences of product failure. Medtronic’s quality certifications are critical to the marketing success of Medtronic’s goods and services. If Medtronic fails to meet these standards, the company’s reputation could be damaged, the company could lose customers, and the company’s revenue and results of operations could decline. Aside from specific customer standards, Medtronic’s success depends generally on the company’s ability to manufacture to exact tolerances precision-engineered components, subassemblies, and finished devices from multiple materials. If Medtronic’s components fail to meet these standards or fail to adapt to evolving standards, the company’s reputation as a manufacturer of high-quality components will be harmed, the company’s competitive advantage could be damaged, and the company could lose customers and market share.

 

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Medtronic is substantially dependent on patent and other proprietary rights and failing to protect such rights or to be successful in litigation related to the company’s rights or the rights of others may result in the company’s payment of significant monetary damages and/or royalty payments, negatively impact the company’s ability to sell current or future products, or prohibit the company from enforcing its patent and other proprietary rights against others.

Medtronic operates in an industry characterized by extensive patent litigation. Patent litigation against Medtronic can result in significant damage awards and injunctions that could prevent Medtronic’s manufacture and sale of affected products or require Medtronic to pay significant royalties in order to continue to manufacture or sell affected products. At any given time, Medtronic is generally involved as both a plaintiff and a defendant in a number of patent infringement actions, the outcomes of which may not be known for prolonged periods of time. While it is not possible to predict the outcome of patent litigation, Medtronic believes the results associated with any such litigation could result in the company’s payment of significant monetary damages and/or royalty payments, negatively impact the company’s ability to sell current or future products, or prohibit the company from enforcing its patent and proprietary rights against others, which would generally have a material adverse impact on Medtronic’s consolidated earnings, financial condition, and/or cash flows.

Medtronic relies on a combination of patents, trade secrets, and non-disclosure and non-competition agreements to protect the company’s proprietary intellectual property, and the company will continue to do so. While Medtronic intends to defend against any threats to the company’s intellectual property, these patents, trade secrets, or other agreements may not adequately protect Medtronic’s intellectual property. Further, pending patent applications owned by Medtronic may not result in patents being issued to the company, patents issued to or licensed by Medtronic in the past or in the future may be challenged or circumvented by competitors and such patents may be found invalid, unenforceable or insufficiently broad to protect Medtronic’s technology or to provide Medtronic with any competitive advantage. Third parties could obtain patents that may require Medtronic to negotiate licenses to conduct the company’s business, and the required licenses may not be available on reasonable terms or at all. Medtronic also relies on non-disclosure and non-competition agreements with certain employees, consultants, and other parties to protect, in part, trade secrets and other proprietary rights. Medtronic cannot be certain that these agreements will not be breached, that the company will have adequate remedies for any breach, that others will not independently develop substantially equivalent proprietary information, or that third parties will not otherwise gain access to the company’s trade secrets or proprietary knowledge.

In addition, the laws of certain countries in which Medtronic markets some of the company’s products do not protect Medtronic’s intellectual property rights to the same extent as the laws of the U.S. If Medtronic is unable to protect the company’s intellectual property in these countries, it could have a material adverse effect on the Medtronic’s business, financial condition, or results of operations.

Product liability claims could adversely impact Medtronic’s financial condition and the company’s earnings and impair the company’s reputation.

Medtronic’s business exposes the company to potential product liability risks that are inherent in the design, manufacture, and marketing of medical devices. In addition, many of the medical devices Medtronic manufactures and sells are designed to be implanted in the human body for long periods of time or indefinitely. Component failures, manufacturing defects, design flaws, or inadequate disclosure of product-related risks or product-related information with respect to Medtronic’s products could result in an unsafe condition or injury to, or death of, a patient. The occurrence of such a problem could result in product liability claims or a recall of, or safety alert relating to, one or more of Medtronic’s products which could ultimately result, in certain cases, in the removal from the body of such products and claims regarding costs associated therewith. Medtronic has elected to self-insure with respect to product liability risks. Product liability claims or product recalls in the future, regardless of their ultimate outcome, could have a material adverse effect on Medtronic’s business and reputation and on the company’s ability to attract and retain customers for the company’s products.

 

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Health care policy changes, including U.S. health care reform legislation signed in 2010, may have a material adverse effect on Medtronic.

In response to perceived increases in health care costs in recent years, there have been and continue to be proposals by the federal government, state governments, regulators, and third-party payers to control these costs and, more generally, to reform the U.S. health care system. Certain of these proposals could limit the prices Medtronic is able to charge for the company’s products or the amounts of reimbursement available for the company’s products and could limit the acceptance and availability of the company’s products. The adoption of some or all of these proposals could have a material adverse effect on Medtronic’s financial position and results of operations.

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010. Certain provisions of the law will not be effective for a number of years and there are many programs and requirements for which the details have not yet been fully established or consequences not fully understood, and it is unclear what the full impacts will be from the law. The legislation imposes significant new taxes on medical device makers in the form of a 2.3 percent excise tax on all U.S. medical device sales that commenced in January 2013. Under the legislation, the total cost to the medical device industry is expected to be approximately $20 billion over 10 years. Medtronic expects the new tax will materially and adversely affect Medtronic’s business, cash flows and results of operations. The law also focuses on a number of Medicare provisions aimed at improving quality and decreasing costs. It is uncertain at this point what negative unintended consequences these provisions will have on patient access to new technologies. The Medicare provisions include value-based payment programs, increased funding of comparative effectiveness research, reduced hospital payments for avoidable readmissions and hospital acquired conditions, and pilot programs to evaluate alternative payment methodologies that promote care coordination (such as bundled physician and hospital payments). Additionally, the law includes a reduction in the annual rate of inflation for Medicare payments to hospitals that began in 2011 and the establishment of an independent payment advisory board to recommend ways of reducing the rate of growth in Medicare spending. Medtronic cannot predict what health care programs and regulations will be ultimately implemented at the federal or state level, or the effect of any future legislation or regulation. However, any changes that lower reimbursement for Medtronic’s products or reduce medical procedure volumes could adversely affect Medtronic’s business and results of operations.

Medtronic’s self-insurance program may not be adequate to cover future losses.

Medtronic has elected to self-insure most of the company’s insurable risks. Medtronic made this decision based on conditions in the insurance marketplace that have led to increasingly higher levels of self-insurance retentions, increasing numbers of coverage limitations, and dramatically higher insurance premium rates. Medtronic maintains a directors and officers policy providing limited coverage and continues to monitor the insurance marketplace to evaluate the value to the company of obtaining insurance coverage for other categories of losses in the future. While based on historical loss trends Medtronic believes that the company’s self-insurance program accruals and the company’s existing insurance coverage will be adequate to cover future losses, Medtronic cannot guarantee that this will remain true. Historical trends may not be indicative of future losses. The fact that Medtronic does not maintain third-party insurance coverage for all categories of losses increases Medtronic’s exposure to unanticipated claims, and these losses could have a material adverse impact on Medtronic’s consolidated earnings, financial condition, and/or cash flows.

If Medtronic experiences decreasing prices for the company’s goods and services and the company is unable to reduce its expenses, the results of the Medtronic’s operations will suffer.

Medtronic may experience decreasing prices for the company’s goods and services due to pricing pressure experienced by the company’s customers from managed care organizations and other third-party payers, increased market power of the company’s customers as the medical device industry consolidates, and increased

 

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competition among medical engineering and manufacturing services providers. If the prices for Medtronic’s goods and services decrease and Medtronic is unable to reduce the company’s expenses, the results of the company’s operations will be adversely affected.

Continuing worldwide economic instability, including challenges faced by the Eurozone countries, could adversely affect Medtronic’s revenues, financial condition or results of operations.

Since fiscal year 2008, the global economy has been impacted by the sequential effects of an ongoing global financial crisis. This global financial crisis, including the European sovereign debt crisis, has caused extreme disruption in the financial markets, including severely diminished liquidity and credit availability. There can be no assurance that there will not be further deterioration in the global economy. Medtronic’s customers and vendors may experience financial difficulties or be unable to borrow money to fund their operations which may adversely impact their ability to purchase Medtronic’s products or to pay for Medtronic’s products on a timely basis, if at all. As with Medtronic’s customers and vendors, these economic conditions make it more difficult for Medtronic to accurately forecast and plan the company’s future business activities. In addition, a significant amount of Medtronic’s trade receivables are with national health care systems in many countries (including, but not limited to, Greece, Ireland, Portugal, and Spain). Repayment of these receivables is dependent upon the financial stability of the economies of those countries.

In light of these global economic fluctuations, Medtronic continues to monitor the creditworthiness of customers located outside the U.S. Failure to receive payment of all or a significant portion of these receivables could adversely affect Medtronic’s results of operations. Further, there are concerns for the overall stability and suitability of the Euro as a single currency, given the economic and political challenges facing individual Eurozone countries. Continuing deterioration in the creditworthiness of the Eurozone countries, the withdrawal of one or more member countries from the European Union (“EU”), or the failure of the Euro as a common European currency could adversely affect Medtronic’s revenues, financial condition or results of operations.

Medtronic is subject to a variety of market and financial risks due to the company’s international operations that could adversely affect those operations or Medtronic’s profitability and operating results.

Medtronic’s operations in countries outside the U.S., which accounted for 46 percent of Medtronic’s net sales for the fiscal year ended April 25, 2014, are accompanied by certain financial and other risks. Medtronic intends to continue to pursue growth opportunities in sales outside the U.S., especially in emerging markets, which could expose Medtronic to greater risks associated with international sales and operations. Medtronic’s profitability and international operations are, and will continue to be, subject to a number of risks and potential costs, including:

 

    local product preferences and product requirements;

 

    longer-term receivables than are typical in the U.S.;

 

    fluctuations in foreign currency exchange rates;

 

    less intellectual property protection in some countries outside the U.S. than exists in the U.S.;

 

    trade protection measures and import and export licensing requirements;

 

    workforce instability;

 

    political and economic instability; and

 

    the potential payment of U.S. income taxes on certain earnings of Medtronic’s subsidiaries outside the U.S. upon repatriation.

In particular, the Obama Administration has announced potential legislative proposals to tax profits of U.S. companies earned abroad. While it is impossible for Medtronic to predict whether these and other proposals will

 

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be implemented, or how they will ultimately impact Medtronic, they may materially impact Medtronic’s results of operations if, for example, Medtronic’s profits earned abroad are subject to U.S. income tax, or Medtronic is otherwise disallowed deductions as a result of these profits.

Finally, changes in foreign currency exchange rates may reduce the reported value of Medtronic’s foreign currency revenues, net of expenses, and cash flows. Medtronic cannot predict changes in currency exchange rates, the impact of exchange rate changes, nor the degree to which Medtronic will be able to manage the impact of currency exchange rate changes.

Medtronic’s international operations expose Medtronic to legal and regulatory risks, which could have a material effect on Medtronic’s business.

In addition to market and financial risks, Medtronic’s profitability and international operations are, and will continue to be, subject to risks relating to changes in foreign medical reimbursement programs and policies and changes in foreign legal and regulatory requirements. In addition, Medtronic’s international operations are governed by various U.S. laws and regulations, including the FCPA and other similar laws that prohibit Medtronic and Medtronic’s business partners from making improper payments or offers of payment to foreign governments and their officials and political parties for the purpose of obtaining or retaining business. Global enforcement of anti-corruption laws has increased substantially in recent years, with more frequent voluntary self-disclosures by companies, aggressive investigations and enforcement proceedings by U.S. and foreign governmental agencies, and assessment of significant fines and penalties against companies and individuals. Medtronic’s international operations create the risk of unauthorized payments or offers of payments by one of Medtronic’s employees, consultants, sales agents, or distributors, because these parties are not always subject to Medtronic’s control. It is Medtronic’s policy to implement safeguards to discourage these practices. However, Medtronic’s existing safeguards and any future improvements may prove to be less than effective, and Medtronic’s employees, consultants, sales agents, or distributors may engage in conduct for which Medtronic might be held responsible. Any alleged or actual violations of these regulations may subject Medtronic to government scrutiny, severe criminal or civil sanctions and other liabilities, including exclusion from government contracting, and could negatively affect Medtronic’s business, reputation, operating results, and financial condition. In addition, the government may seek to hold Medtronic liable for successor liability FCPA violations committed by any companies in which Medtronic invests or that Medtronic acquires.

Consolidation in the health care industry could have an adverse effect on Medtronic’s revenues and results of operations.

Many health care industry companies, including health care systems, are consolidating to create new companies with greater market power. As the health care industry consolidates, competition to provide goods and services to industry participants will become more intense. These industry participants may try to use their market power to negotiate price concessions or reductions for medical devices that incorporate components produced by Medtronic. If Medtronic is forced to reduce the company’s prices because of consolidation in the health care industry, Medtronic’s revenues would decrease and Medtronic’s consolidated earnings, financial condition, and/or cash flows would suffer.

Medtronic’s business is indirectly subject to health care industry cost-containment measures that could result in reduced sales of medical devices containing Medtronic’s components.

Most of Medtronic’s customers, and the health care providers to whom Medtronic’s customers supply medical devices, rely on third-party payers, including government programs and private health insurance plans, to reimburse some or all of the cost of the procedures in which medical devices that incorporate components Medtronic manufactures or assembles are used. The continuing efforts of governmental authorities, insurance companies, and other payers of health care costs to contain or reduce these costs could lead to patients being unable to obtain approval for payment from these third-party payers. If third-party payer payment approval

 

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cannot be obtained by patients, sales of finished medical devices that include Medtronic’s components may decline significantly, and Medtronic’s customers may reduce or eliminate purchases of Medtronic’s components. The cost-containment measures that health care providers are instituting, both in the U.S. and internationally, could harm Medtronic’s ability to operate profitably. For example, managed care organizations have successfully negotiated volume discounts for pharmaceuticals. While this type of discount pricing does not currently exist for medical devices, if managed care or other organizations were able to affect discount pricing for devices, it could result in lower prices to Medtronic’s customers from their customers and, in turn, reduce the amounts Medtronic can charge its customers for the company’s medical devices.

Medtronic’s research and development efforts rely upon investments and investment collaborations, and Medtronic cannot guarantee that any previous or future investments or investment collaborations will be successful.

Medtronic’s strategy to provide a broad range of therapies to restore patients to fuller, healthier lives requires a wide variety of technologies, products, and capabilities. The rapid pace of technological development in the medical industry and the specialized expertise required in different areas of medicine make it difficult for one company alone to develop a broad portfolio of technological solutions. In addition to internally generated growth through Medtronic’s research and development efforts, historically Medtronic has relied, and expects to continue to rely, upon investments and investment collaborations to provide Medtronic access to new technologies both in areas served by Medtronic’s existing businesses as well as in new areas.

Medtronic expects to make future investments where Medtronic believes that the company can stimulate the development of, or acquire, new technologies and products to further Medtronic’s strategic objectives and strengthen Medtronic’s existing businesses. Investments and investment collaborations in and with medical technology companies are inherently risky, and Medtronic cannot guarantee that any of Medtronic’s previous or future investments or investment collaborations will be successful or will not materially adversely affect Medtronic’s consolidated earnings, financial condition, and/or cash flows.

The continuing development of many of Medtronic’s products depends upon Medtronic maintaining strong relationships with health care professionals.

If Medtronic fails to maintain the company’s working relationships with health care professionals, many of Medtronic’s products may not be developed and marketed in line with the needs and expectations of the professionals who use and support Medtronic’s products, which could cause a decline in Medtronic’s earnings and profitability. The research, development, marketing, and sales of many of Medtronic’s new and improved products is dependent upon Medtronic maintaining working relationships with health care professionals. Medtronic relies on these professionals to provide Medtronic with considerable knowledge and experience regarding the development, marketing, and sale of Medtronic’s products. Physicians assist Medtronic as researchers, marketing and product consultants, inventors, and public speakers. If Medtronic is unable to maintain the company’s strong relationships with these professionals and continue to receive their advice and input, the development and marketing of Medtronic’s products could suffer, which could have a material adverse effect on Medtronic’s consolidated earnings, financial condition, and/or cash flows.

Negative conditions in the global credit market may impair Medtronic’s commercial paper program, Medtronic’s auction rate securities, and Medtronic’s other fixed income securities, which may cause losses and liquidity issues for Medtronic.

Medtronic has investments in marketable debt securities that are classified and accounted for as available-for-sale. Medtronic’s debt securities include U.S. and foreign government and agency securities, corporate debt securities, certificates of deposit, debt funds, and mortgage-backed and other asset-backed securities, including auction rate securities. Market conditions over the past several years have included periods of significant economic uncertainty and at times general market distress, especially in the banking and financial

 

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services sector. During these periods of economic uncertainty, Medtronic may experience reduced liquidity across the fixed-income investment market, including the securities in which Medtronic invests. In the event Medtronic needs to sell these securities, Medtronic may not be able to do so in a timely manner or for a value that is equal to the underlying principal. In addition, Medtronic may be required to adjust the carrying value of the securities and record an impairment charge. If Medtronic determines that the fair value of such securities is temporarily impaired, Medtronic would record a temporary impairment as a component of accumulated other comprehensive loss within shareholders’ equity. If it is determined that the fair value of these securities is other-than-temporarily impaired, Medtronic would record a loss in the company’s consolidated statements of earnings, which could materially adversely impact Medtronic’s results of operations and financial condition.

Negative market conditions may also impair Medtronic’s ability to access the capital markets through the issuance of commercial paper or debt securities, or may impact Medtronic’s ability to sell such securities at a reasonable price and may negatively impact Medtronic’s ability to borrow from financial institutions.

Medtronic’s products are continually the subject of clinical trials conducted by Medtronic, Medtronic’s competitors, or other third parties, the results of which may be unfavorable, or perceived as unfavorable, and could have a material adverse effect on Medtronic’s business, financial condition, and results of operations.

As a part of the regulatory process of obtaining marketing clearance for new products and new indications for existing products, Medtronic conducts and participates in numerous clinical trials with a variety of study designs, patient populations, and trial endpoints. Unfavorable or inconsistent clinical data from existing or future clinical trials conducted by Medtronic, by Medtronic’s competitors, or by third parties, or the market’s or U.S. FDA’s perception of this clinical data, may adversely impact Medtronic’s ability to obtain product approvals, Medtronic’s position in, and share of, the markets in which Medtronic participates, and Medtronic’s business, financial condition, and results of operations.

Failure to integrate acquired businesses into Medtronic’s operations successfully could adversely affect Medtronic’s business.

As part of Medtronic’s strategy to develop and identify new products and technologies, Medtronic has made several acquisitions in recent years and may make additional acquisitions in the future. Medtronic’s integration of the operations of acquired businesses requires significant efforts, including the coordination of information technologies, research and development, sales and marketing, operations, manufacturing, and finance. These efforts result in additional expenses and involve significant amounts of management’s time that cannot then be dedicated to other projects. Medtronic’s failure to manage and coordinate the growth of the combined company successfully could also have an adverse impact on Medtronic’s business. In addition, Medtronic cannot be certain that the businesses Medtronic acquires will become profitable or remain so. If Medtronic’s acquisitions are not successful, Medtronic may record unexpected impairment charges. Factors that will affect the success of Medtronic’s acquisitions include:

 

    the presence or absence of adequate internal controls and/or significant fraud in the financial systems of acquired companies;

 

    adverse developments arising out of investigations by governmental entities of the business practices of acquired companies, including potential liability imposed by the FCPA;

 

    any decrease in customer loyalty and product orders caused by dissatisfaction with the combined companies’ product lines and sales and marketing practices, including price increases;

 

    Medtronic’s ability to retain key employees; and

 

    the ability of the combined company to achieve synergies among its constituent companies, such as increasing sales of the combined company’s products, achieving cost savings, and effectively combining technologies to develop new products.

 

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For additional information regarding risks relating to the transaction, see risk factors above under the headings “Risks Relating to the Transaction” and “Risks Relating to the Business of the Combined Company.”

The medical device industry is the subject of numerous governmental investigations into marketing and other business practices. These investigations could result in the commencement of civil and/or criminal proceedings, substantial fines, penalties, and/or administrative remedies, divert the attention of Medtronic’s management, and have an adverse effect on Medtronic’s financial condition and results of operations.

Medtronic is subject to rigorous regulation by the U.S. FDA and numerous other federal, state, and foreign governmental authorities. These authorities have been increasing their scrutiny of Medtronic’s industry. Medtronic has received subpoenas and other requests for information from state and federal governmental agencies, including, among others, the DOJ and the Office of Inspector General of HHS. These investigations have related primarily to financial arrangements with health care providers, regulatory compliance, and product promotional practices. Similar requests were made of Medtronic’s major competitors.

Medtronic is fully cooperating with these investigations and is responding to these requests. However, Medtronic cannot predict when these investigations will be resolved, the outcome of these investigations, or their impact on Medtronic. An adverse outcome in one or more of these investigations could include the commencement of civil and/or criminal proceedings, substantial fines, penalties, and/or administrative remedies, including exclusion from government reimbursement programs, entry into Corporate Integrity Agreements (“CIAs”) with governmental agencies and amendments to existing CIAs. In addition, resolution of any of these matters could involve the imposition of additional and costly compliance obligations. Finally, if these investigations continue over a long period of time, they could divert the attention of management from the day-to-day operations of Medtronic’s business and impose significant administrative burdens, including cost, on Medtronic. These potential consequences, as well as any adverse outcome from these investigations or other investigations initiated by the government at any time, could have a material adverse effect on Medtronic’s financial condition and results of operations.

Changes in tax laws or exposure to additional income tax liabilities could have a material impact on Medtronic’s financial condition and results of operations.

Medtronic is subject to income taxes as well as non-income based taxes, in both the U.S. and various jurisdictions outside the U.S. Medtronic is subject to ongoing tax audits in various jurisdictions. Tax authorities may disagree with certain positions Medtronic has taken and assess additional taxes. Medtronic regularly assess the likely outcomes of these audits in order to determine the appropriateness of Medtronic’s tax provision. However, there can be no assurance that Medtronic will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material impact on Medtronic’s consolidated earnings and financial condition. Additionally, changes in tax laws or tax rulings could materially impact Medtronic’s effective tax rate. For example, recent legislation imposed on medical device manufacturers a 2.3 percent excise tax on U.S. sales of medical devices beginning in January 2013. Proposals for fundamental U.S. corporate tax reform, if enacted, could have a material impact on Medtronic’s future results of operations.

Medtronic is increasingly dependent on sophisticated information technology and if Medtronic fails to properly maintain the integrity of the company’s data or if Medtronic’s products do not operate as intended, Medtronic’s business could be materially affected.

Medtronic is increasingly dependent on sophisticated information technology for its products and infrastructure. As a result of technology initiatives, recently enacted regulations, changes in Medtronic’s system platforms and integration of new business acquisitions, Medtronic has been consolidating and integrating the number of systems the company operates and has upgraded and expanded the company’s information systems capabilities. Medtronic’s information systems require an ongoing commitment of significant resources to maintain, protect, and enhance existing systems and develop new systems to keep pace with continuing changes

 

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in information processing technology, evolving systems and regulatory standards, the increasing need to protect patient and customer information, and changing customer patterns. In addition, third parties may attempt to hack into Medtronic’s products or systems and may obtain data relating to patients with Medtronic’s products or Medtronic’s proprietary information. If Medtronic fails to maintain or protect the company’s information systems and data integrity effectively, Medtronic could lose existing customers, have difficulty attracting new customers, have problems in determining product cost estimates and establishing appropriate pricing, have difficulty preventing, detecting, and controlling fraud, have disputes with customers, physicians, and other health care professionals, have regulatory sanctions or penalties imposed, have increases in operating expenses, incur expenses or lose revenues as a result of a data privacy breach, or suffer other adverse consequences. There can be no assurance that Medtronic’s process of consolidating the number of systems Medtronic operates, upgrading and expanding Medtronic’s information systems capabilities, protecting and enhancing Medtronic’s systems and developing new systems to keep pace with continuing changes in information processing technology will be successful or that additional systems issues will not arise in the future. Any significant breakdown, intrusion, interruption, corruption, or destruction of these systems, as well as any data breaches, could have a material adverse effect on Medtronic’s business.

 

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SELECTED HISTORICAL FINANCIAL DATA OF MEDTRONIC

Medtronic is providing you with the following selected historical consolidated financial information to assist you in your analysis of the financial aspects of the transaction. Medtronic derived the financial information as of and for the fiscal years ended April 30, 2010 through April 25, 2014 from its audited financial statements for the fiscal years then ended. The information set forth below is only a summary that you should read together with the historical audited consolidated financial statements of Medtronic and the related notes, as well as the section titled “Medtronic Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this joint proxy statement/prospectus. Historical results are not necessarily indicative of any results to be expected in the future.

 

     Fiscal Year Ended Last Friday of April  
     2014      2013      2012      2011      2010  
(in millions, except per share data)                                   

Operating Results for the Fiscal Year:

              

Net sales

   $ 17,005       $ 16,590       $ 16,184       $ 15,508       $ 15,392   

Earnings from continuing operations

     3,065         3,467         3,415         3,055         3,083   

Earnings from discontinued operations, net of tax

     —           —           202         41         16   

Net earnings

     3,065         3,467         3,617         3,096         3,099   

Per Share of Common Stock:

              

Basic—Earnings from continuing operations

   $ 3.06       $ 3.40       $ 3.24       $ 2.84       $ 2.79   

Basic—Net earnings

     3.06         3.40         3.43         2.87         2.80   

Diluted—Earnings from continuing operations

     3.02         3.37         3.22         2.82         2.78   

Diluted—Net earnings

     3.02         3.37         3.41         2.86         2.79   

Cash dividends declared

     1.12         1.04         0.97         0.90         0.82   

Financial Position at Fiscal Year-end:

              

Working capital

   $ 15,651       $ 13,902       $ 10,409       $ 9,437       $ 8,482   

Total assets

     37,943         34,900         32,818         30,662         28,305   

Long-term debt

     10,315         9,741         7,359         8,112         6,944   

Shareholders’ equity

     19,443         18,671         17,113         15,968         14,629   

 

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SELECTED HISTORICAL FINANCIAL DATA OF COVIDIEN

Covidien is providing you with the following selected historical consolidated financial information to assist you in your analysis of the financial aspects of the transaction. Covidien derived (i) the financial information as of September 25, 2009 and September 24, 2010 and as of and for the fiscal years ended September 30, 2011 through September 27, 2013 from its audited consolidated financial statements for the fiscal years then ended, (ii) the financial information for the fiscal years ended September 25, 2009 and September 24, 2010 from its unaudited consolidated financial statements for the fiscal years then ended, as amounts have been recast to reflect Covidien’s former Pharmaceuticals business as discontinued operations, and (iii) the financial information as of and for the six months ended March 28, 2014 and March 29, 2013 from its unaudited condensed consolidated financial statements which include, in the opinion of Covidien’s management, all normal and recurring adjustments that are considered necessary for the fair presentation of the results for such interim periods and dates. The information set forth below is only a summary that you should read together with the historical audited and unaudited consolidated financial statements of Covidien and the related notes, as well as the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Covidien’s Current Report on Form 8-K filed with the SEC on July 11, 2014 and Covidien’s Quarterly Report on Form 10-Q for the quarterly period ended March 28, 2014 filed with the SEC on May 1, 2014, each of which is incorporated by reference into this joint proxy statement/prospectus. Historical results are not necessarily indicative of any results to be expected in the future.

 

    Six Months Ended     Fiscal Year Ended Last Friday of September  
    March 28,
2014
    March 29,
2013
   
      2013     2012     2011(1)     2010     2009  
(in millions, except share and per share data)                                          

Consolidated Statement of Income Data(2):

             

Net sales

  $ 5,237      $ 5,097      $ 10,235      $ 9,851      $ 9,607      $ 8,438      $ 7,813   

Gross profit(3)

    3,081        3,065        6,085        5,907        5,721        4,945        4,411   

Selling, general, and administrative expenses(4)

    1,746        1,652        3,340        3,261        3,153        2,825        2,846   

Research and development expenses(5)

    260        233        508        479        412        333        386   

Restructuring charges, net

    73        62        105        82        114        66        34   

Gain on divestiture, net

    (111     —          —          —          —          —          —     

Operating Income

    1,113        1,118        2,132        2,085        2,042        1,721        1,145   

Interest expense, net

    (99     (97     (192     (191     (184     (179     (151

Other income, net(6)

    100        18        89        25        22        40        145   

Income from continuing operations before income taxes

    1,114        1,039        2,029        1,919        1,880        1,582        1,139   

Income from continuing operations

    839        836        1,600        1,637        1,581        1,276        501   

Consolidated Balance Sheet Data

             

(End of Period):

             

Total assets

  $ 20,507      $ 22,610      $ 19,918      $ 22,257      $ 20,374      $ 20,387      $ 17,139   

Long-term debt

    5,015        4,562        5,018        4,531        4,197        4,451        2,961   

Shareholders’ equity

    9,562        10,976        9,242        10,565        9,817        8,974        8,001   

Share Data:

             

Income from continuing operations:

             

Basic earnings per share

  $ 1.86      $ 1.77      $ 3.43      $ 3.40      $ 3.21      $ 2.55      $ 1.00   

Diluted earnings per share

  $ 1.84      $ 1.75      $ 3.40      $ 3.37      $ 3.18      $ 2.53      $ 0.99   

Cash dividends declared per ordinary share

  $ 0.64      $ 0.52      $ 1.10      $ 0.94      $ 0.83      $ 0.74      $ 0.66   

Basic weighted average number of shares outstanding

    451        472        467        481        493        500        503   

Diluted weighted average number of shares outstanding

    455        476        471        486        497        504        505   

 

1) Fiscal 2011 includes 53 weeks. All other fiscal years above include 52 weeks.

 

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2) Derived from unaudited consolidated financial statements, as amounts have been recast to reflect Covidien’s former Pharmaceuticals business as discontinued operations.
3) Gross profit for the first six months of fiscal 2014 includes $4 million of charges related to the sale of acquired inventory that had been written up to fair value upon the acquisition of businesses, $3 million of inventory impairments resulting from the exit of the OneShot TM renal denervation program and $3 million of restructuring-related accelerated depreciation expense. Gross profit for the first six months of fiscal 2013 includes $1 million of restructuring-related accelerated depreciation expense. Gross profit for fiscal 2013 includes $4 million of restructuring-related accelerated depreciation expense. Gross profit for fiscal 2012 includes $17 million of charges related to the sale of acquired inventory that had been written up to fair value upon the acquisition of a business, $15 million of inventory impairments resulting from a product discontinuance and $5 million of restructuring-related accelerated depreciation expense. Gross profit for fiscal 2011 includes $32 million of charges related to the sale of acquired inventory that had been written up to fair value upon the acquisition of a business and $2 million of restructuring-related accelerated depreciation expense. Gross profit for fiscal 2010 includes $39 million of charges related to the sale of acquired inventory that had been written up to fair value upon the acquisition of a business.
4) Amount for the first six months of fiscal 2014 includes a charge of $65 million for the estimated additional cost to remediate environmental matters at a site located in Orrington, Maine, a $6 million net charge resulting from the exit of the OneShotTM renal denervation program and $3 million of transaction costs associated with the acquisitions. Amount for the first six months of fiscal 2013 includes income of $6 million resulting from adjustments to contingent consideration. Amount for fiscal 2013 includes a charge of $4 million resulting from entering into a distribution agreement and income of $3 million resulting from adjustments to contingent consideration. Amount for fiscal 2012 includes legal charges of $49 million related to Covidien’s indemnification obligations for certain claims pertaining to all known pending and estimated future pelvic mesh product liability claims, $20 million of transaction costs associated with acquisitions and a $3 million capital equipment impairment resulting from a product discontinuance. Amount for fiscal 2011 includes legal charges of $35 million related to Covidien’s indemnification obligations for certain claims pertaining to all known pending and estimated future pelvic mesh products liability claims, net of insurance recoveries and shareholder settlement income. Amount for fiscal 2010 includes transaction costs of $39 million associated with acquisitions, a legal charge of $33 million related to an antitrust case and a net loss on divestitures of $25 million. Amount for fiscal 2009 includes charges of $183 million for Covidien’s share of settlements of Tyco International securities cases and Covidien’s portion of the estimated cost to settle all the remaining Tyco International securities cases outstanding, legal charges totaling $94 million for three antitrust cases, a charge of $71 million for the estimated additional cost to remediate environmental matters at a site located in Orrington, Maine and charges totaling $21 million related to divestitures.
5) Includes charges resulting from entering into license agreements of $17 million and $12 million during fiscal 2013 and 2012, respectively. Amount for fiscal 2009 includes $115 million of in-process research and development charges.
6) Amounts primarily relate to the impact of the tax sharing agreement with Tyco International and TE Connectivity Ltd.

 

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SELECTED UNAUDITED PRO FORMA FINANCIAL DATA

The following selected unaudited pro forma financial data (“selected pro forma data”) gives effect to the acquisition of Covidien by Medtronic. The selected pro forma data have been prepared using the acquisition method of accounting under U.S. generally accepted accounting principles, under which the assets and liabilities of Covidien will be recorded by Medtronic at their respective fair values as of the date the acquisition is completed. The selected Unaudited Pro Forma Condensed Combined Balance Sheet data as of April 25, 2014 gives effect to the transaction as if it had occurred on April 25, 2014. The selected Unaudited Pro Forma Condensed Combined Statement of Earnings data for the fiscal year ended April 25, 2014 gives effect to New Medtronic’s results of operations as if the transaction had occurred on April 27, 2013, the beginning of fiscal year 2014.

The selected pro forma data have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial statements (“pro forma statements”) of the combined company appearing elsewhere in this joint proxy statement/prospectus and the accompanying notes to the pro forma statements. In addition, the pro forma statements were based on, and should be read in conjunction with, the historical audited financial statements of Medtronic (which are available in this joint proxy statement/prospectus), the historical audited financial statements of Covidien (which are available in Covidien’s Current Report on Form 8-K filed with the SEC on July 11, 2014) and the historical unaudited financial statements of Covidien for the six-month periods ended March 28, 2014 and March 29, 2013 (which are available in Covidien’s Quarterly Report on Form 10-Q for the quarterly period ended March 28, 2014). See “Where You Can Find More Information” and “Unaudited Pro Forma Condensed Combined Financial Information” sections of this joint proxy statement/prospectus for additional information. The selected pro forma data has been presented for informational purposes only and is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the acquisition been completed as of the dates indicated. In addition, the selected pro forma data does not purport to project the future financial position or operating results of the combined company. Also, as explained in more detail in the accompanying notes to the pro forma statements, the preliminary purchase price (consideration) and fair value assessment of assets and liabilities reflected in the selected pro forma data is subject to adjustment and may vary significantly from the final actual purchase price (consideration) and fair value assessment of assets and liabilities that will be recorded upon completion of the acquisition. Any excess of the purchase price over the fair value of identified assets acquired and liabilities assumed will be recognized as goodwill.

Selected Unaudited Pro Forma Condensed Combined Statement of Earnings Data

 

(in millions, except per share data)    For the fiscal year
ended April 25, 2014
 
     (Pro forma combined)   

Net sales

   $ 27,380   

Earnings from continuing operations

   $ 3,144   

Earnings from continuing operations per share-basic

   $ 2.19   

Earnings from continuing operations per share-diluted

   $ 2.17   

Weighted average shares outstanding-basic

     1,435.8   

Weighted average shares outstanding-diluted

     1,449.8   

Selected Unaudited Pro Forma Condensed Combined Balance Sheet

 

(in millions)    As of April 25, 2014  
     (Pro forma combined)   

Total assets

   $ 85,804   

Long-term debt

     18,562   

Total liabilities

     38,603   

Total shareholders’ equity and redeemable noncontrolling interest

     47,201   

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus and the documents incorporated into it by reference contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning Medtronic, Covidien, New Medtronic, the acquisition, the merger and the other transactions contemplated by the Transaction Agreement that involve risks and uncertainties. All statements, trend analyses and other information contained herein about the markets for the services and products of New Medtronic, Medtronic and Covidien and future trends, plans, events, results of operations or financial condition, as well as other statements identified by the use of forward-looking terminology, including “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “goal,” “forecast,” “guidance,” “predict,” “project,” “intend,” “may,” “possible,” “potential” or the negative of these terms or other similar words, phrases or expressions, constitute forward-looking statements. In particular, statements, express or implied, concerning future actions, conditions or events, future operating results, the ability to generate sales, income or cash flow, to realize cost savings or other benefits associated with the transaction or to pay dividends or repurchase shares are forward-looking statements. These forward-looking statements are not historical facts but instead represent only New Medtronic’s, Medtronic’s and Covidien’s expectations, estimates and projections regarding future events, based on current beliefs of management as well as assumptions made by, and information currently available to, management. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, many of which are outside the control of New Medtronic, Medtronic and Covidien, which may include the risk factors set forth above and other market, business, legal and operational uncertainties discussed elsewhere in this joint proxy statement/prospectus and the documents which are incorporated herein by reference. Those uncertainties include, but are not limited to:

 

  the inherent uncertainty associated with financial projections;

 

  failure to satisfy one or more closing conditions with respect to the acquisition and the merger;

 

  the inability to complete the transaction, including restructuring in connection with the acquisition, on a timely basis or at all;

 

  adverse regulatory decisions;

 

  the risk that the required regulatory approvals for the transaction are not obtained, are delayed or are subject to conditions that are not anticipated;

 

  product liability claims;

 

  the timing and success of product launches;

 

  the difficulty of predicting the timing or outcome of product development efforts and regulatory agency approvals or actions, if any;

 

  potential for adverse pricing movement;

 

  difficulties or delays in manufacturing;

 

  reduction or interruption in supply;

 

  changes in tax laws or interpretations that could increase New Medtronic’s, Medtronic’s or Covidien’s consolidated tax liabilities, including, if the transaction is consummated, changes in tax laws that would result in New Medtronic being treated as a domestic corporation for United States federal tax purposes;

 

  the risks that the new businesses will not be integrated successfully or that the estimated cost savings, synergies and benefits of the acquisition will not be realized;

 

  access to available financing (including financing for the acquisition or refinancing of Medtronic or Covidien debt) on a timely basis and on reasonable terms;

 

  New Medtronic’s ability to refinance the bridge loan facilities on favorable terms and maintain Medtronic’s current long-term credit rating;

 

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  the timing and amount of any dividends or share repurchases;

 

  unanticipated changes in the markets for Medtronic’s and Covidien’s business segments;

 

  the anticipated size of the markets and continued demand for Medtronic’s and Covidien’s products;

 

  unanticipated downturns in business relationships with customers or their purchases from Medtronic or Covidien;

 

  the ability to execute and realize the expected benefits from strategic initiatives including the transaction as well as revenue growth plans and cost control and productivity improvement programs;

 

  the risks and uncertainties normally incident to the medical device industry, including industry competition and competitive pressures on Medtronic’s and Covidien’s sales and pricing;

 

  reduction, interruption or increase in the cost of material, energy and other production costs, or unexpected costs that cannot be recouped in product pricing;

 

  the availability and pricing of third party sourced products and materials;

 

  the risks of fluctuations in foreign currency exchange rates;

 

  the magnitude of any disruptions from manufacturing rationalizations;

 

  the ability to develop and introduce new products;

 

  changes in the mix of products sold;

 

  variability of trade buying patterns;

 

  the introduction of competing technologies;

 

  the impact of competitive products and pricing;

 

  unexpected technical or marketing difficulties;

 

  unexpected claims, charges, litigation or dispute resolutions;

 

  the difficulty of predicting the timing or outcome of pending or future litigation or government investigations;

 

  costs and efforts to defend or enforce intellectual property rights;

 

  product quality problems;

 

  political developments;

 

  changing legislation and governmental regulations;

 

  changes in capital markets conditions (including currency exchange rate fluctuations), inflation and interest rates;

 

  the loss of key senior management or scientific staff;

 

  risks associated with international operations;

 

  risks associated with self-insurance and commercial insurance;

 

  successful compliance with governmental regulations applicable to New Medtronic’s, Medtronic’s and Covidien’s facilities, products and/or businesses;

 

  changes in the laws and regulations, affecting among other things, pricing and reimbursement of pharmaceutical products;

 

  health care policy changes;

 

  exposure to fluctuations in energy prices; and

 

  volatility of the end markets that Medtronic and/or Covidien serve.

 

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The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect our businesses described herein and in Medtronic’s and Covidien’s most recent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and other documents filed from time to time with the SEC or incorporated herein by reference.

Actual results might differ materially from those expressed or implied by these forward-looking statements because these forward-looking statements are subject to assumptions and uncertainties. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus or the date of any document incorporated by reference. All subsequent written and oral forward-looking statements concerning the merger, the acquisition or the other matters addressed in this joint proxy statement/prospectus and attributable to New Medtronic, Medtronic or Covidien or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except as required by applicable law or regulation, none of New Medtronic, Medtronic or Covidien undertakes any obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this joint proxy statement/prospectus or any document incorporated by reference might not occur.

 

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PART 1—THE TRANSACTION AND THE SPECIAL MEETINGS

THE SPECIAL MEETING OF MEDTRONIC’S SHAREHOLDERS

Overview

This joint proxy statement/prospectus is being provided to Medtronic shareholders as part of a solicitation of proxies by the Medtronic board of directors for use at the special meeting of Medtronic shareholders and at any adjournments or postponements of such meeting. This joint proxy statement/prospectus is being furnished to Medtronic shareholders on or about [—], 2014. In addition, this joint proxy statement/prospectus constitutes a prospectus for New Medtronic in connection with the issuance by New Medtronic of ordinary shares to be delivered to Medtronic shareholders by or at the direction of MergerSub in connection with the transaction. This joint proxy statement/prospectus provides Medtronic shareholders with information they need to be able to vote or instruct their vote to be cast at the special meeting.

Date, Time and Place of the Medtronic Special Meeting

Medtronic will hold a special meeting of shareholders on [—], 2014 at [—] local time, at [—].

Attendance

Attendance at the Medtronic special meeting is limited to Medtronic shareholders on the Medtronic record date and their proxies. Please indicate on the proxy card if you plan to attend the special meeting. If your shares are held through a bank, broker or other nominee, and you would like to attend, please write to the Office of the Corporate Secretary, 710 Medtronic Parkway, Minneapolis, Minnesota 55432, or bring to the meeting a statement or a letter from the bank, broker or other nominee confirming beneficial ownership of Medtronic shares as of the Medtronic record date. Any beneficial holder who plans to vote at the Medtronic special meeting must obtain a legal proxy from his or her bank, broker or other nominee and should contact such bank, broker or other nominee for instructions on how to obtain a legal proxy. Each Medtronic shareholder may be asked to provide a valid picture identification, such as a driver’s license or passport, and proof of ownership as of the Medtronic record date. The use of cell phones, smartphones, pagers and recording and photographic equipment will not be permitted in the meeting rooms.

Proposals

At the special meeting, Medtronic shareholders will vote upon proposals to:

 

  adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic;

 

  approve the reduction of the share premium account of New Medtronic to allow the creation of distributable reserves of New Medtronic;

 

  approve, on a non-binding, advisory basis, specified compensatory arrangements between Medtronic and its named executive officers relating to the transaction; and

 

  adjourn the special meeting to another time or place if necessary or appropriate in order (i) to solicit additional proxies if there are insufficient votes at the time of the Medtronic special meeting to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic, (ii) to provide to Medtronic shareholders in advance of the special meeting any supplement or amendment to the joint proxy statement/prospectus or (iii) to disseminate any other information which is material to Medtronic shareholders voting at the special meeting.

Record Date; Outstanding Shares; Shares Entitled to Vote

Only holders of Medtronic common shares at 5:00 p.m. (Eastern Time in the U.S.) on [—], 2014, the record date for the Medtronic special meeting, will be entitled to notice of, and to vote at, the Medtronic special meeting

 

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or any adjournments thereof. On the Medtronic record date, there were [—] Medtronic common shares outstanding, held by [—] holders of record. Each outstanding Medtronic share is entitled to one vote on each proposal and any other matter properly coming before the Medtronic special meeting.

Quorum

A majority of the outstanding common shares, present in person or by proxy that entitles such share to be voted at the Medtronic special meeting, will constitute a quorum for the transaction of business at the Medtronic special meeting. Medtronic’s inspector of election intends to treat as “present” for these purposes shareholders who have submitted properly executed or transmitted proxies that are marked “abstain.” The inspector will also treat as “present” at the Medtronic special meeting shares held in “street name” by brokers that are voted on at least one proposal to come before the meeting.

Vote Required; Recommendation of Medtronic’s Board of Directors

Proposal to Adopt the Plan of Merger Contained in the Transaction Agreement and Approve the Revised Memorandum and Articles of Association of New Medtronic

Medtronic shareholders are considering and voting on a proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic. You should carefully read this joint proxy statement/prospectus in its entirety for more detailed information concerning the transaction. In particular, you are directed to the Transaction Agreement, the conditions appendix and the Form of Memorandum and Articles of Association of New Medtronic, which are attached as Annex A, Annex B and Annex D, respectively to this joint proxy statement/prospectus.

The adoption of the plan of merger contained in the Transaction Agreement and the approval of the revised memorandum and articles of association of New Medtronic requires the affirmative vote of holders of a majority of the Medtronic common shares outstanding and entitled to vote on this proposal. Because the vote required to approve this proposal is based upon the total number of outstanding Medtronic common shares, abstentions, failures to vote and broker non-votes will have the same effect as a vote against the proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic.

The board of directors of Medtronic recommends that you vote “FOR” the proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic.

In considering the recommendation of the Medtronic board of directors, Medtronic shareholders should be aware that directors and executive officers of Medtronic have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders. See “The Transaction—Interests of Certain Persons in the Transaction—Medtronic.”

Proposal to Create Distributable Reserves of New Medtronic

Medtronic shareholders are considering and voting on a proposal to reduce the share premium account of New Medtronic resulting from (i) the issuance of New Medtronic shares pursuant to the scheme and (ii) a subscription for New Medtronic shares by MergerSub prior to the merger, in order to create distributable reserves of New Medtronic. You should read carefully this joint proxy statement/prospectus in its entirety for more detailed information concerning the creation of distributable reserves. See “Creation of Distributable Reserves of New Medtronic.”

Approval of the proposal to reduce the share premium account of New Medtronic to allow the creation of distributable reserves requires the affirmative vote of holders of a majority of the Medtronic common shares represented, in person or by proxy that authorizes such shares to be voted on this proposal, at the special meeting.

 

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Because the vote required to approve this proposal is based upon the total number of Medtronic common shares represented, in person or by proxy that entitles such shares to be voted on this proposal, abstentions and failures by persons in attendance at the special meeting to vote shares that are represented, in person or by proxy that authorizes such shares to be voted on this proposal, at the special meeting will have the same effect as a vote against this proposal. Broker non-votes will have no effect on this proposal. Approval of this proposal is not a condition to the completion of the transaction and whether or not this proposal is approved will have no impact on the completion of the transaction.

The board of directors of Medtronic recommends that you vote “FOR” the proposal to reduce the share premium account of New Medtronic to allow the creation of distributable reserves.

Proposal to Approve, on a Non-Binding, Advisory Basis, Specified Compensatory Arrangements Between Medtronic and its Named Executive Officers Relating to the Transaction

Medtronic shareholders are considering and voting on a proposal to approve, on a non-binding, advisory basis, specified compensatory arrangements between Medtronic and its named executive officers relating to the transaction. See “The Transaction—Interests of Certain Persons in the Transaction—Medtronic”.

Approval, on a non-binding, advisory basis, specified compensatory arrangements between Medtronic and its named executive officers relating to the transaction requires the affirmative vote of holders of a majority of the Medtronic common shares represented, in person or by proxy that authorizes such shares to be voted on such proposal, at the special meeting. Because the vote required to approve this proposal is based upon the total number of Medtronic common shares represented, in person or by proxy that authorizes such shares to be voted on such proposal, abstentions and failures by persons in attendance at the special Meeting to vote shares that are represented, in person or by proxy that authorizes such shares to be voted on this proposal, at the special meeting will have the same effect as a vote against this proposal. Broker non-votes will have no effect on this proposed Approval of this proposal is not a condition to the completion of the transaction and whether or not this proposal is approved will have no impact on the completion of the transaction.

The board of directors of Medtronic recommends that you vote “FOR” the proposal to approve, on a non-binding, advisory basis, specified compensatory arrangements between Medtronic and its named executive officers relating to the transaction.

Proposal to Adjourn the Special Meeting

Medtronic shareholders may be asked to vote on a proposal to adjourn the special meeting to another time or place if necessary or appropriate in order (i) to solicit additional proxies if there are insufficient votes at the time of the Medtronic special meeting to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic, (ii) to provide to Medtronic shareholders in advance of the special meeting any supplement or amendment to the joint proxy statement/prospectus or (iii) to disseminate any other information which is material to Medtronic shareholders voting at the special meeting.

Approval of the Medtronic adjournment proposal requires the affirmative vote of holders of a majority of the Medtronic common shares represented, in person or by proxy that authorizes such shares to be voted on such proposal, at the special meeting, whether or not a quorum is present. Because the vote required to approve this proposal is based upon the total number of Medtronic voting shares represented, in person or by proxy that authorizes such shares to be voted on such proposal, abstentions and failures by persons in attendance at the special meeting to vote shares that are represented, in person or by proxy that authorizes such shares to be voted on this proposal, at the special meeting will have the same effect as a vote against this proposal. Broker non-votes will have no effect on this proposal. Approval of this proposal is not a condition to the completion of the transaction and whether or not this proposal is approved will have no impact on the completion of the transaction.

 

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The board of directors of Medtronic recommends that you vote “FOR” the Medtronic adjournment proposal.

Share Ownership and Voting by Medtronic’s Officers and Directors

As of the Medtronic record date, the Medtronic directors and executive officers had the right to vote approximately [—] Medtronic common shares, representing approximately [—]% of the Medtronic common shares then outstanding and entitled to vote at the meeting. It is expected that the Medtronic directors and executive officers who are shareholders of Medtronic will vote “FOR” the proposal to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic, “FOR” the proposal to create distributable reserves of New Medtronic, “FOR” the approval, on a non-binding, advisory basis, of specified compensatory arrangements between Medtronic and its named executive officers relating to the transaction and “FOR” the Medtronic adjournment proposal, although none of them has entered into any agreement requiring them to do so.

Voting Your Shares

Medtronic shareholders may vote in person at the special meeting or by proxy. Medtronic recommends that you submit your proxy even if you plan to attend the special meeting. If you vote by proxy, you may change your vote, among other ways, if you attend and vote at the special meeting.

If you own shares in your own name, you are considered, with respect to those shares, the “shareholder of record.” If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name.” You may vote shares held in street name only if you obtain a “legal” proxy from the record holder (broker or other nominee) giving you the right to vote the shares or if you instruct your broker, bank or other nominee how to vote as described below under “—Voting Shares Held in Street Name.”

If you are a Medtronic shareholder of record you may use the enclosed proxy card to tell the persons named as proxies how to vote your shares. If you properly complete, sign and date your proxy card, your shares will be voted in accordance with your instructions. The named proxies will vote all shares at the meeting for which proxies have been properly submitted and not revoked. If you sign and return your proxy card but do not mark your card to tell the proxies how to vote, your shares will be voted “FOR” the proposals to adopt the plan of merger contained in the Transaction Agreement and approve the revised memorandum and articles of association of New Medtronic, to create distributable reserves of New Medtronic, to approve the advisory proposal and to adjourn the special meeting.

Medtronic shareholders may also vote over the internet at [—] or by telephone at [—] by 11:59 p.m. (Eastern Time in the U.S.) on the day immediately preceding the Medtronic special meeting. Voting instructions are printed on the proxy card or voting information form you received. Either method of submitting a proxy will enable your shares to be represented and voted at the special meeting.

Medtronic shareholders should not send in their stock certificates with their proxy cards.    As described on page [] of this joint proxy statement/prospectus, Medtronic shareholders will be sent materials for exchanging Medtronic common shares shortly after the completion of the transaction.

Voting Shares Held in Street Name

If your shares are held in an account through a broker, bank or other nominee, you must instruct the broker, bank or other nominee how to vote your shares by following the instructions that the broker, bank or other nominee provides you along with this joint proxy statement/prospectus. Your broker, bank or other nominee may have an earlier deadline by which you must provide instructions to it as to how to vote your shares, so you should read carefully the materials provided to you by your broker, bank or other nominee.

If you do not provide a signed voting instruction form to your bank, broker or other nominee, your shares will not be voted on any proposal on which the bank, broker or other nominee does not have discretionary

 

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authority to vote. This is referred to in this joint proxy statement/prospectus and in general as a broker non-vote. In these cases, the bank, broker or other nominee will not be able to vote your shares on those matters for which specific authorization is required. Brokers do not have discretionary authority to vote on any of the proposals. Shares constituting broker non-votes on a proposal are not counted or deemed to be present in person or by proxy for the purpose of voting on such proposal.

Accordingly, if you fail to provide a signed voting instruction form to your bank, broker or other nominee, your shares held through such bank, broker or other nominee will not be voted.

Revoking Your Proxy

If you are a Medtronic shareholder of record, you may revoke your proxy at any time before it is voted at the special meeting by:

 

  delivering a written revocation letter to the Corporate Secretary of Medtronic;

 

  submitting your voting instructions again by telephone or over the internet;

 

  signing and returning by mail a proxy with a later date so that it is received prior to the special meeting; or

 

  voting in person at the special meeting and filing a written notice of termination of the prior appointment of a proxy with Medtronic, or by filing a new written appointment of proxy with Medtronic.

Attendance at the special meeting will not, in and of itself, revoke a proxy.

If your shares are held in “street name” by a bank, broker or other nominee, you should follow the instructions of your bank, broker or other nominee regarding the revocation of proxies.

Costs of Solicitation

Medtronic will bear the cost of soliciting proxies from its shareholders, except that, pursuant to the Transaction Agreement, the costs associated with the filing, printing, publication and posting of this joint proxy statement/prospectus to Covidien’s shareholders and Medtronic’s shareholders will be paid 70% by Medtronic and 30% by Covidien.

Medtronic will solicit proxies by mail. In addition, the directors, officers and employees of Medtronic may solicit proxies from its shareholders by telephone, electronic communication, or in person, but will not receive any additional compensation for their services. Medtronic will make arrangements with brokerage houses and other custodians, nominees, and fiduciaries for forwarding proxy solicitation material to the beneficial owners of Medtronic common shares held of record by those persons and will reimburse them for their reasonable out-of-pocket expenses incurred in forwarding such proxy solicitation materials.

Medtronic has engaged a professional proxy solicitation firm, [—], to assist in soliciting proxies for a fee of $[—]. In addition, Medtronic will reimburse [—] for its reasonable disbursements.

Other Business

Medtronic is not aware of any other business to be acted upon at the special meeting. If, however, other matters are properly brought before the special meeting, including an adjournment of the meeting for any reason other than the ones specified in the adjournment proposal, the proxies will have discretion to vote or act on those matters according to their best judgment and they intend to vote the shares as the Medtronic board of directors may recommend.

Assistance

If you need assistance in completing your proxy card or have questions regarding Medtronic’s special meeting, please contact [—].

 

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THE SPECIAL MEETINGS OF COVIDIEN’S SHAREHOLDERS

Overview

This joint proxy statement/prospectus is being provided to Covidien shareholders as part of a solicitation of proxies by the Covidien board of directors for use at the special meetings referred to below of Covidien shareholders and at any adjournments or postponements of such meetings. This joint proxy statement/prospectus is being furnished to Covidien shareholders on or about [—], 2014. This joint proxy statement/prospectus provides Covidien shareholders with information they need to be able to vote or instruct their vote to be cast at the special meetings.

Date, Time and Place of the Covidien Special Meetings

Covidien will convene a special Court-ordered meeting of shareholders on [—] at [—] local time, at [—]. Covidien will also convene an extraordinary general meeting of shareholders on [—] at [—] local time, at [—], or, if later, as soon as possible after the conclusion or adjournment of the Covidien special Court-ordered meeting.

Attendance

Attendance at the Covidien special Court-ordered meeting and the Covidien EGM is limited to Covidien shareholders on the Covidien record date and their proxies. Please indicate on the relevant proxy card if you plan to attend the special meetings. If your shares are held through a bank, broker or other nominee, and you would like to attend, please write to John W. Kapples, Vice President and Secretary, Covidien plc, c/o Covidien, 15 Hampshire Street, Mansfield, Massachusetts 02048, or bring to the meeting a statement or a letter from the bank, broker or other nominee confirming beneficial ownership of Covidien shares as of the Covidien record date for the meetings. Any beneficial holder who plans to vote at either meeting must obtain a legal proxy from his or her bank, broker or other nominee and should contact such bank, broker or other nominee for instructions on how to obtain a legal proxy. Each Covidien shareholder may be asked to provide a valid picture identification, such as a driver’s license or passport, and proof of ownership as of the Covidien record date. The use of cell phones, smartphones, pagers and recording and photographic equipment will not be permitted in the meeting rooms.

Proposals

Covidien Special Court-Ordered Meeting: Covidien shareholders (other than Medtronic or any of its affiliates) are being asked to consider and vote on a proposal at the special Court-ordered meeting to approve the scheme of arrangement.

Covidien Extraordinary General Meeting: Covidien shareholders are also being asked to consider and vote on a proposal at the Covidien EGM to approve the scheme of arrangement, in addition to certain other proposals as set forth in the EGM resolutions described below.

The first three EGM resolutions relate to the approval of the scheme of arrangement and of actions required to be taken in connection with the scheme—specifically, both the cancellation of the shares of Covidien that are not already owned by New Medtronic or its affiliates and the subsequent allotment and issuance of new shares of Covidien to New Medtronic and IrSub in exchange for the scheme consideration. The fourth EGM resolution also relates to the scheme of arrangement and would ensure that the holders of any new ordinary shares of Covidien issued at or after [—], Irish time, on the last business day before the scheme becomes effective are acquired by New Medtronic and/or IrSub for the scheme consideration. The merger and the acquisition are conditioned on approval of EGM resolutions 1 through 4.

 

  1. EGM Resolution #1: To approve the scheme of arrangement and authorize the directors of Covidien to take all such actions as they consider necessary or appropriate for carrying the scheme of arrangement into effect.

 

  2. EGM Resolution #2: To approve the cancellation of any Covidien ordinary shares in issue prior to [—], Irish time, on the day before the Irish High Court hearing to sanction the scheme.

 

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  3. EGM Resolution #3: To authorize the directors of Covidien to allot and issue new Covidien shares, fully paid up, to New Medtronic and IrSub in connection with effecting the scheme.

 

  4. EGM Resolution #4: To amend the articles of association of Covidien so that any ordinary shares of Covidien that are issued at or after [—], Irish time, on the last business day before the scheme becomes effective are acquired by New Medtronic and/or IrSub for the scheme consideration.

The merger and the acquisition are not conditioned on approval of the remaining EGM resolutions. The fifth EGM resolution relates to the creation of distributable reserves of New Medtronic, which are required under Irish law in order for New Medtronic to be able to pay dividends and repurchase or redeem shares after the transaction.

 

  5. EGM Resolution #5: To approve the reduction of the share premium account of New Medtronic resulting from (i) the issuance of New Medtronic shares pursuant to the scheme and (ii) a subscription for New Medtronic shares by MergerSub prior to the merger, in order to create distributable reserves of New Medtronic.

Covidien shareholders are also being asked to vote on the following proposal at the EGM:

 

  6. EGM Resolution #6: To approve, on a non-binding, advisory basis, specified compensatory arrangements between Covidien and its named executive officers relating to the transaction.

Record Date; Outstanding Ordinary Shares; Ordinary Shares Entitled to Vote

Only holders of Covidien ordinary shares as of 5:00 p.m. (Eastern Time in the U.S.) on [—], 2014, the record date for the Covidien special meetings, will be entitled to notice of, and to vote at the Covidien special meetings or any adjournments thereof. On the Covidien record date, there were [—] Covidien ordinary shares outstanding, held by [—] holders of record. Each outstanding Covidien ordinary share (other than those held by Medtronic or any of its affiliates) is entitled to one vote on each proposal and any other matter properly coming before the Covidien special meetings.

Quorum

The holders of Covidien ordinary shares outstanding, present in person or by proxy, entitling them to exercise a majority of the voting power of Covidien on the Covidien record date will constitute a quorum for each of the special meetings. Covidien’s inspector of election intends to treat as “present” for these purposes shareholders who have submitted properly executed or transmitted proxies that are marked “abstain.” The inspector will also treat as “present” shares held in “street name” by brokers that are voted on at least one proposal to come before the meeting.

Ordinary Share Ownership and Voting by Covidien’s Directors and Officers

As of the Covidien record date, the Covidien directors and executive officers had the right to vote approximately [—] of the then-outstanding Covidien ordinary shares at the special meetings, representing approximately [—]% of the Covidien ordinary shares then outstanding and entitled to vote at the special Court-ordered meeting and approximately [—]% of the Covidien ordinary shares then outstanding and entitled to vote at the EGM. The Covidien directors and executive officers who are shareholders of Covidien intend to vote “FOR” the scheme of arrangement at the special Court-ordered meeting, “FOR” the scheme of arrangement at the EGM, “FOR” the cancellation of any Covidien ordinary shares in issue before [—], Irish time, on the day before the Irish High Court hearing to sanction the scheme, “FOR” the authorization of the directors of Covidien to allot and issue new Covidien shares, fully paid up, to New Medtronic and IrSub in connection with effecting the scheme, “FOR” amendment of the articles of association of Covidien so that any ordinary shares of Covidien that are issued at or after [—], Irish time, on the last business day before the scheme becomes effective are

 

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acquired by New Medtronic and/or IrSub for the scheme consideration, “FOR” the proposal to reduce the share premium account of New Medtronic resulting from (i) the issuance of New Medtronic shares pursuant to the scheme and (ii) a subscription for New Medtronic shares by MergerSub prior to the merger, in order to create distributable reserves of New Medtronic, and “FOR” the approval, on a non-binding advisory basis, of specified compensatory arrangements between Covidien and its named executive officers, although none of them has entered into any agreement requiring them to do so.

Vote Required; Recommendation of Covidien’s Board of Directors

Covidien Special Court-Ordered Meeting

Proposal to approve the scheme of arrangement: Covidien shareholders are being asked to vote on a proposal to approve the scheme at both the Covidien special Court-ordered meeting and at the Covidien EGM. The vote required for such proposal is different at each of the meetings, however. As set out in full under the section entitled “Part 2—Explanatory Statement—Consents and Meetings,” the approval required at the special Court-ordered meeting is a majority in number of the Covidien shareholders of record casting votes on the proposal representing three-fourths (75 percent) or more in value of the Covidien ordinary shares held by such holders, present and voting either in person or by proxy.

Because the vote required to approve the proposal at the Covidien special Court-ordered meeting is based on votes properly cast at the meeting, and because abstentions and broker non-votes are not considered votes properly cast, abstentions and broker non-votes, along with failures to vote, will have no effect on such proposal.

The merger and the acquisition are conditioned on approval of the scheme at the Covidien special Court-ordered meeting.

The Covidien board of directors recommends that Covidien shareholders vote “FOR” the proposal to approve the scheme of arrangement at the special Court-ordered meeting.

In considering the recommendation of the Covidien board of directors, Covidien shareholders should be aware that directors and executive officers of Covidien have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders. See “The Transaction—Interests of Certain Persons in the Transaction—Covidien.

 

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Covidien Extraordinary General Meeting

Set forth below is a table summarizing certain information with respect to the EGM Resolutions:

 

EGM
Resolution #

  

Resolution

   Ordinary or
Special
Resolution?
   Transaction
Conditioned on
Approval of
Resolution?

1

   Approve the scheme of arrangement and authorize the directors of Covidien to take all such actions as they consider necessary or appropriate for carrying the scheme of arrangement into effect.    Ordinary    Yes

2

   Approve the cancellation of any Covidien ordinary shares in issue before [—], Irish time, on the day before the Irish High Court hearing to sanction the scheme.    Special    Yes

3

   Authorize the directors of Covidien to allot and issue new Covidien shares, fully paid up, to New Medtronic and IrSub in connection with effecting the scheme.    Ordinary    Yes

4

   Amend the articles of association of Covidien so that any ordinary shares of Covidien that are issued at or after [—], Irish time, on the last business day before the scheme becomes effective are acquired by New Medtronic and/or IrSub for the scheme consideration.    Special    Yes

5

   Approve the reduction of the share premium account of New Medtronic resulting from (i) the issuance of New Medtronic shares pursuant to the scheme and (ii) a subscription for New Medtronic shares by MergerSub prior to the merger, in order to create distributable reserves of New Medtronic.    Ordinary    No

6

   Approve, on a non-binding, advisory basis, specified compensatory arrangements between Covidien and its named executive officers relating to the transaction.    Ordinary    No

At the Covidien EGM, the requisite approval of each of the EGM resolutions depends on whether it is an “ordinary resolution” (EGM resolutions 1, 3, 5 and 6), which requires the approval of the holders of at least a majority of the votes cast by the holders of Covidien ordinary shares present and voting, either in person or by proxy, or a “special resolution” (EGM resolutions 2 and 4), which requires the approval of the holders of at least 75 percent of the votes cast by the holders of Covidien ordinary shares present and voting, either in person or by proxy.

For all the EGM resolutions, because the votes required to approve such resolutions are based on votes properly cast at the meeting, and because abstentions and broker non-votes are not considered votes properly cast, abstentions and broker non-votes, along with failures to vote, will have no effect on the EGM resolutions.

The Covidien board of directors recommends that Covidien shareholders vote “FOR” the proposals to approve each of the EGM resolutions.

In considering the recommendations of the Covidien board of directors, Covidien shareholders should be aware that directors and executive officers of Covidien have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders. See “The Transaction—Interests of Certain Persons in the Transaction—Covidien.

Voting Your Ordinary Shares

Covidien shareholders may vote by proxy or in person at the special meetings. Covidien recommends that you submit your proxy even if you plan to attend the special meetings. If you vote by proxy, you may change your vote, among other ways, if you attend and vote at the special meetings.

 

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If you own shares in your own name, you are considered, with respect to those shares, the “shareholder of record.” If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name.”

If you are a Covidien shareholder of record you may use the enclosed proxy cards to tell the persons named as proxies how to vote your shares. If you are a Covidien shareholder of record, the shares listed on your proxy cards will include the following shares, if applicable:

 

  shares issued under the Covidien Savings Related Share Plan; and

 

  shares held in a book-entry account at Computershare Trust Company, N.A., Covidien’s transfer agent.

If you properly complete, sign and date a proxy card, your shares will be voted in accordance with your instructions. The named proxies will vote all shares at the meetings for which proxies have been properly submitted and not revoked. If you sign and return a proxy card appointing the Chairman as your proxy but do not mark your card to tell the proxy how to vote on a voting item, your shares will be voted with respect to such item in accordance with the recommendations of the Covidien board of directors.

Covidien shareholders may also vote over the internet at www.proxyvote.com or by telephone at +1-800-690-6903 anytime up to 11:59 p.m. (Eastern Time in the U.S.) on the day immediately preceding the relevant meeting. Voting instructions are printed on the proxy cards or voting information form you received. Either method of submitting a proxy will enable your shares to be represented and voted at the special meetings.

Voting Ordinary Shares Held in Street Name

If your shares are held in an account through a bank, broker or other nominee, you must instruct the bank, broker or other nominee how to vote your shares by following the instructions that the bank, broker or other nominee provides you along with this joint proxy statement/prospectus. Your bank, broker or other nominee, as applicable, may have an earlier deadline by which you must provide instructions to it as to how to vote your shares, so you should read carefully the materials provided to you by your bank, broker or other nominee.

If you do not provide a signed voting instruction form to your bank, broker or other nominee, your shares will not be voted on any proposal on which the bank, broker or other nominee does not have discretionary authority to vote. This is referred to in this joint proxy statement/prospectus and in general as a broker non-vote. In these cases, the bank, broker or other nominee will not be able to vote your shares on those matters for which specific authorization is required. Brokers do not have discretionary authority to vote on any of the proposals.

Accordingly, if you fail to provide a signed voting instruction form to your bank, broker or other nominee, your shares held through such bank, broker or other nominee will not be voted.

Revoking Your Proxy

If you are a Covidien shareholder of record, you may revoke your proxy at any time before it is voted at the relevant special meeting by:

 

  delivering a written revocation letter to the Secretary of Covidien;

 

  submitting your voting instructions again by telephone or over the internet;

 

  signing and returning by mail a proxy with a later date so that it is received prior to the special meeting; or

 

  attending the special meeting and voting by ballot in person.

 

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Attendance at either special meeting will not, in and of itself, revoke a proxy.

If your shares are held in “street name” by a bank, broker or other nominee, you should follow the instructions of your bank, broker or other nominee regarding the revocation of proxies.

Costs of Solicitation

Covidien will bear the cost of soliciting proxies from its shareholders, except that, pursuant to the Transaction Agreement, the costs associated with the filing, printing, publication and posting of this joint proxy statement/prospectus to Covidien’s shareholders and Medtronic’s shareholders will be paid 70% by Medtronic and 30% by Covidien.

Covidien will solicit proxies by mail. In addition, the directors, officers and employees of Covidien may solicit proxies from its shareholders by telephone, electronic communication, or in person, but will not receive any additional compensation for their services. Covidien will make arrangements with brokerage houses and other custodians, nominees and fiduciaries for forwarding proxy solicitation material to the beneficial owners of Covidien ordinary shares held of record by those persons and will reimburse them for their reasonable out-of-pocket expenses incurred in forwarding such proxy solicitation materials.

Covidien has engaged a professional proxy solicitation firm, D.F. King & Co., Inc., to assist in soliciting proxies for a fee of approximately $20,000. In addition, Covidien will reimburse D.F. King & Co., Inc. for its reasonable disbursements.

Other Business

Covidien is not aware of any other business to be acted upon at the special meetings. If, however, other matters are properly brought before the special meetings, the proxies will have discretion to vote or act on those matters according to their best judgment and they intend to vote the shares as the Covidien board of directors may recommend.

Adjournment; Postponement

Any adjournment or postponement of the special Court-ordered meeting will result in an adjournment or postponement, as applicable, of the EGM.

Under the Covidien articles of association, the Chairman of the Covidien EGM may at any time adjourn the EGM or the special Court-ordered meeting if, in his opinion, it would facilitate the conduct of the business of the EGM or the special Court-ordered meeting, as applicable, to do so or if he is so directed by the Covidien board of directors. Pursuant to this authority, subject to certain limitations contained in the Transaction Agreement, the EGM or the special Court-ordered meeting may be adjourned to, among other things, solicit proxies if there are not sufficient votes at the time of the EGM or the special Court-ordered meeting, as applicable, in favor of the above-described proposals and resolutions, as applicable.

Assistance

If you need assistance in completing your proxy card or have questions regarding Covidien’s special meetings, please contact D.F. King & Co., Inc., the proxy solicitation agent for Covidien, by mail at 48 Wall Street, 22nd Floor, New York, New York 10005, by telephone at (800) 488-8035 (toll free in the U.S. and Canada) or (212) 269-5550 (collect), or by e-mail at covidien@dfking.com.

 

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THE TRANSACTION

The Merger and the Acquisition

On June 15, 2014, Medtronic and Covidien entered into the Transaction Agreement by and among Covidien, Medtronic, New Medtronic, IrSub, U.S. AcquisitionCo, and MergerSub. Under the terms of the Transaction Agreement, (i) New Medtronic and IrSub will acquire Covidien pursuant to a scheme of arrangement under Section 201, involving a cancellation of the issued share capital of Covidien under Sections 72 and 74 of the Irish Companies Act 1963 and (ii) MergerSub will merge with and into Medtronic, with Medtronic as the surviving corporation in the merger. As a result of the transaction, both Medtronic and Covidien will become wholly owned subsidiaries of New Medtronic. Prior to the closing of the transaction, New Medtronic will re-register as a public limited company, the ordinary shares of which are expected to be listed on the NYSE.

As a result of the transaction, (i) each outstanding Medtronic common share will entitle its holder to receive one New Medtronic ordinary share in exchange for such Medtronic common share and (ii) each outstanding Covidien ordinary share will entitle its holder to receive (x) $35.19 in cash and (y) 0.956 of a New Medtronic ordinary share in exchange for such Covidien ordinary share.

Medtronic reserves the right, subject to the prior written approval of the Irish Takeover Panel, to effect the acquisition by way of a takeover offer, as an alternative to the scheme, in the circumstances described in and subject to the terms of the Transaction Agreement. In such event, such takeover offer will be implemented on terms and conditions that are at least as favorable to Covidien shareholders (except for an acceptance condition set at 80 percent of the nominal value of the Covidien shares to which such offer relates and which are not already beneficially owned by Medtronic) as those which would apply in relation to the scheme, among other requirements.

Background of the Transaction

The Covidien board of directors has, on an ongoing basis, considered the long-term strategy of Covidien and strategic opportunities that might be available to Covidien to enhance shareholder value, including additional investments in new growth opportunities, potential acquisitions and the possible sale or merger of Covidien. Following consideration by the Covidien board of directors of various potential strategic opportunities, on March 20, 2014, the Covidien board of directors authorized Covidien management to approach Medtronic to discuss a potential combination of the two companies. The Covidien board of directors made this decision based on its determination that Medtronic likely would have the best strategic fit with Covidien, was most likely to have an interest in and ability to execute, and would be willing to pay the highest price in, a business combination with Covidien, should the Covidien board ultimately decide to engage in such a transaction.

As a part of the ongoing review of Medtronic’s long-term strategy, the Medtronic board of directors has, from time to time, considered strategic opportunities that might be available to it to enhance shareholder value, including additional investments in new growth opportunities and potential acquisitions, taking into account global healthcare, industry and transaction trends as well as economic and other conditions generally. In this context, Medtronic management identified that expanding Medtronic’s product offerings to include a broader product portfolio would be a way to better position Medtronic to execute on its globalization and economic value strategies.

Pursuant to the authorization of the Covidien board of directors, on March 25, 2014, Mr. José E. Almeida, President and Chief Executive Officer of Covidien, called Mr. Omar Ishrak, Chief Executive Officer of Medtronic, to arrange an in-person meeting that was held on April 2, 2014. During this meeting, Messrs. Almeida and Ishrak discussed a variety of opportunities and challenges facing their respective businesses in the new healthcare environment and Mr. Almeida suggested to Mr. Ishrak that Medtronic consider a potential combination of Covidien and Medtronic. Mr. Almeida described to Mr. Ishrak various aspects of Covidien’s business and his views on the healthcare industry as well as the strategic rationale for such a combination. The

 

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meeting concluded with Mr. Ishrak telling Mr. Almeida that he would discuss the possibility of a potential transaction with Medtronic’s lead independent director and the Medtronic management team. A few days later, Mr. Ishrak discussed the meeting with Richard Anderson, Medtronic’s lead independent director.

On April 3, 2014, Mr. Ishrak called Mr. Almeida to schedule a meeting between several members of the Medtronic and Covidien management teams to further discuss the potential benefits of a combination of the two companies. On April 11, 2014, Mr. Ishrak, Mr. Almeida and members of their respective management teams met in person and discussed, on a confidential basis, Covidien’s product portfolio, business strategy and long-term outlook and Covidien’s view of potential operational synergies that a combination of the two companies could create. Medtronic’s management team explained to Covidien’s management team that, before engaging in further discussions, they needed to discuss these matters with the Medtronic board of directors, and determine whether a combination of the two companies could be expected to be in the best interests of Medtronic and its shareholders.

During an executive session of a regularly scheduled meeting of the Medtronic board of directors on April 17, 2014, Mr. Ishrak described for the Medtronic board the conversations to date with Covidien. Members of the Medtronic board of directors asked questions and discussed Mr. Ishrak’s report and the conversations with Covidien. Following this discussion, the Medtronic board of directors authorized Medtronic management to explore a possible transaction with Covidien and designated four independent members of the Medtronic board as an ad hoc working group available to provide Medtronic management with prompt guidance and advice, from time to time, in connection with a potential transaction with Covidien. Following the meeting of the Medtronic board of directors, members of Medtronic management, including Mr. Ishrak, met with the directors in the ad hoc working group for further discussion. Between April 17 and June 13, 2014, the directors’ ad hoc working group met telephonically from time to time with Mr. Ishrak and other members of Medtronic’s management team to discuss the status of the potential transaction and the Medtronic management team’s discussions with the Covidien management team. During these meetings, the ad hoc working group provided management with guidance and advice regarding the potential transaction with Covidien.

On April 18, 2014, Mr. Ishrak and Mr. Almeida spoke by telephone and discussed next steps in exploring a possible combination of the two companies. Mr. Ishrak informed Mr. Almeida that the Medtronic board of directors authorized Mr. Ishrak to continue discussions with Covidien regarding a possible transaction. Mr. Ishrak also indicated that the initial phase of discussions should focus on confirming that there was a sound strategic and operational rationale for a combination of the two companies, with which Mr. Almeida agreed. Mr. Ishrak and Mr. Almeida acknowledged that only if the boards of directors of each of Medtronic and Covidien concluded that there was a compelling strategic rationale would the respective boards authorize Medtronic and Covidien management to pursue discussions related to other considerations, such as valuation, diligence and transaction structure.

On April 23, 2014, Covidien and Medtronic entered into a mutual confidentiality agreement, which included a reciprocal 15-month “standstill” provision. Following the execution of the confidentiality agreement and through the execution of the Transaction Agreement on June 15, 2014, representatives of Covidien and Medtronic (including advisors) conducted due diligence on Medtronic and Covidien, respectively.

On April 24, 2014, representatives of Goldman Sachs contacted Perella Weinberg to discuss various matters relating to the potential transaction, including due diligence and overall transaction timing. During the course of this conversation, Goldman Sachs advised Perella Weinberg that Covidien did not view a potential transaction between the parties as a merger-of-equals and instead would view any transaction as an acquisition of Covidien by Medtronic.

On May 2, 2014, members of the Covidien and Medtronic management teams met in person to discuss Covidien’s business and prospects. During this meeting, members of Covidien management presented to Medtronic’s management team information concerning Covidien’s internal management structure, portfolio, business strategy, product pipeline, various financial metrics and financial outlook and Covidien’s perspective as to the strategic rationale for Medtronic’s potential acquisition of Covidien, including potential synergies.

 

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On May 4, 2014, Mr. Ishrak and Mr. Almeida met in person and discussed various matters relating to a possible transaction, including potential synergies, the business strategy of the combined company and the structure and timing of a possible transaction. During this meeting, Mr. Ishrak indicated that Medtronic was still analyzing whether to proceed with a potential transaction and if it decided to proceed, then Medtronic expected to be in a position to provide Covidien with a preliminary, non-binding proposal, at the end of May 2014.

Between May 4 and June 4, 2014, representatives of Covidien’s and Medtronic’s management teams and their respective legal and financial advisors held several discussions regarding due diligence and transaction structuring matters.

On May 16, 2014, the Medtronic board of directors held an in person meeting in Minneapolis, Minnesota, attended by members of Medtronic management, as well as representatives of Cleary Gottlieb Steen & Hamilton LLP (“Cleary Gottlieb”), Medtronic’s legal counsel in connection with the transaction, and Perella Weinberg. At this meeting, Medtronic management provided to the Medtronic board of directors an overview of Covidien, including its organizational and operating structure, product portfolio, historical financial performance and growth prospects, and reviewed the strategic and financial rationale for a potential transaction with Covidien, including a preliminary assessment of potential synergies and a discussion of potential benefits of the potential transaction to patients. Medtronic management, together with representatives of Cleary Gottlieb and Perella Weinberg, then provided an overview of potential transaction structures and discussed various risks associated with a transaction with Covidien. Members of the Medtronic board of directors asked questions and discussed the various presentations and related matters throughout the meeting and Medtronic management and representatives of Perella Weinberg and Cleary Gottlieb responded to comments and questions from the directors.

On May 21 and May 22, 2014, the Covidien board of directors held a regularly scheduled meeting in Dublin, Ireland, attended, for certain parts of the meeting, by members of Covidien management and representatives of Wachtell, Lipton, Rosen & Katz (“Wachtell Lipton”), Covidien’s legal counsel in connection with the transaction, and representatives of Goldman Sachs. Mr. Almeida described to the Covidien board of directors the discussions that had taken place with Medtronic, including that if Medtronic decided to proceed with a potential transaction, it expected to be in a position to provide Covidien with a preliminary, non-binding proposal at the end of May. During this meeting, a representative of Wachtell Lipton discussed with the Covidien board of directors an overview of the duties of directors and the Irish Takeover Rules in the context of a possible transaction with Medtronic. Also during this meeting, representatives of Goldman Sachs provided an update on recent M&A activity in the healthcare industry and an overview of Medtronic. Representatives of Goldman Sachs also reviewed with the Covidien board of directors an illustrative standalone financial analysis of Covidien, an illustrative financial analysis of Covidien and Medtronic combined, based on conversations with Covidien management, and the strategic rationale for an acquisition of Covidien by Medtronic, noting the strategic and financial benefits from such a transaction as compared to Covidien remaining a stand-alone company. In addition, representatives of Goldman Sachs reviewed with the Covidien board of directors key financial metrics for evaluating a potential proposal from Medtronic. Detailed discussions ensued throughout this meeting.

On May 22, 2014, the Medtronic board of directors held a telephonic meeting, attended by members of Medtronic management, as well as representatives of Cleary Gottlieb and Perella Weinberg. Medtronic management reviewed with the Medtronic board of directors certain historical and projected financial information for each of Medtronic and Covidien on a standalone basis and an illustrative financial analysis of Medtronic and Covidien combined, both with and without the impact of anticipated synergies. The Medtronic board of directors also discussed the strategic rationale for, and potential benefits of, the proposed transaction, including the anticipated strategic benefits, cost synergies and potential access to substantially all of Covidien’s cash without subjecting it to U.S. tax. Medtronic management also reviewed with the Medtronic board of directors various potential transaction structures and post-closing ownership percentages in the combined company for Medtronic and Covidien shareholders, noting that any potential transaction would likely involve Covidien shareholders receiving a mix of cash and stock in the combined company. Mr. Ishrak and the other members of the Medtronic board of directors emphasized the importance of a strong integration team that would

 

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work to achieve the anticipated synergies with as little disruption as possible to the business teams’ ability to execute on their strategic plans. The Medtronic board of directors, Medtronic management and the advisors then discussed recent proposals for potential U.S. tax reform and the potential impact that such proposals might have on Medtronic on a standalone basis and on Medtronic and Covidien combined, including the potential impact of such proposals on tax rates and access to non-U.S. cash. The Medtronic board of directors, management and the advisors also discussed that a proposed transaction with Covidien would be taxable to Medtronic shareholders and noted the impact that this tax would have on Medtronic shareholders, particularly long-term shareholders who are more likely to have a very low basis in their Medtronic stock as well as the impact on Medtronic’s reputation and business if Medtronic pursued a transaction that would result in its holding company being domiciled outside of the United States. In addition, representatives of Cleary Gottlieb noted that members of the Medtronic board of directors and certain members of Medtronic management could be subject to an additional excise tax imposed on directors and officers of companies that re-domicile from the United States to another jurisdiction, and that in a number of precedent transactions, the re-domiciling company indemnified the directors and officers for this tax, which had the effect of putting the directors and officers in the same tax position as if the excise tax, which is not applicable to other shareholders, had not been imposed. Representatives of Cleary Gottlieb noted that directors and officers of Medtronic would still be responsible for, and the indemnity described would not cover, any capital gains tax on the exchange of Medtronic common shares in the transaction, and Medtronic directors and officers would need to pay these amounts just like all other Medtronic shareholders. Representatives of Perella Weinberg then presented a preliminary financial analysis regarding a potential acquisition of Covidien, and the Medtronic board of directors engaged in a discussion of potential bidding strategies in light of the Perella Weinberg financial analysis and the magnitude of the estimated cost synergies. Members of the Medtronic board of directors asked questions and discussed the various presentations and related matters throughout the meeting and Medtronic management and representatives of Perella Weinberg and Cleary Gottlieb responded to comments and questions from the directors.

Following the Covidien board meeting on May 22, 2014, Mr. Almeida called Mr. Ishrak to discuss the potential transaction. Mr. Almeida told Mr. Ishrak that Covidien has significant value as a stand-alone company and that Medtronic would need to offer a compelling premium in order for the Covidien board of directors to approve a transaction. In that regard, Mr. Almeida explained to Mr. Ishrak that the Covidien board of directors believed that the potential acquisition would create substantial strategic benefits for the combined company, and that the premium should account for these benefits. In addition, Mr. Almeida noted that the Covidien board of directors ascribed value to Covidien’s Irish domicile, and that the Covidien board believed that domiciling the combined company in Ireland would create incremental value in addition to the strategic benefits of a combination. Mr. Ishrak stated that, while he and the rest of the Medtronic board of directors were approaching the potential transaction on a basis generally consistent with what had been described by Mr. Almeida, they were still working through various considerations and he was not in a position to offer more feedback at that time. However, Mr. Ishrak reiterated that Medtronic expected to be in a position by the end of May to decide whether to propose and, if so, to propose, on a non-binding basis, a price and structure for a combination of the two companies.

On May 27, 2014, the Medtronic board of directors held a telephonic meeting attended by members of Medtronic management as well as representatives of Cleary Gottlieb and Perella Weinberg. Medtronic management reviewed with the Medtronic board of directors an updated transaction structure analysis and related financial analyses, including an analysis comparing illustrative scenarios in which Medtronic shareholders would hold different post-closing percentages of the combined company under alternative assumptions that there would be a U.S. domiciled or an Irish domiciled entity. The Medtronic board of directors, management and the advisors then discussed recent proposals for potential U.S. tax reform and the potential impact that such proposals might have on Medtronic on a standalone basis and on Medtronic and Covidien combined, including the potential impact of such proposals on tax rates and access to non-U.S. cash. Following extensive discussion, there was general consensus that a transaction that resulted in Medtronic shareholders owning 70% of the post-closing combined company, domiciled in Ireland, would be preferable from a financial point of view due to increased balance sheet flexibility and other factors, despite the minimal reduction in effective tax rate. Medtronic

 

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management and representatives of Cleary Gottlieb then reviewed with the Medtronic board of directors certain legal, diligence and other risks associated with the proposed transaction. Members of the Medtronic board of directors asked questions and discussed the presentations and related matters throughout the meeting and Medtronic management and representatives of Perella Weinberg and Cleary Gottlieb responded to comments and questions from the directors. Following discussion of the potential risks and benefits, the Medtronic board of directors unanimously concluded that the risks would likely be outweighed by the benefits and authorized management to continue its consideration of the proposed transaction.

On May 30, 2014, the Covidien board of directors held a telephonic meeting, attended by members of Covidien management, as well as representatives of Wachtell Lipton and Goldman Sachs. Members of Covidien management and representatives of Goldman Sachs updated the Covidien board of directors on their interactions with Medtronic and its advisors following the May 21, 2014 board meeting and the expectation that Medtronic would deliver a preliminary, non-binding proposal to acquire Covidien later that day. Members of Covidien’s management and representatives of Goldman Sachs reviewed with the Covidien board of directors an updated financial analysis of a potential transaction with Medtronic. Also at this meeting, a representative of Wachtell Lipton reviewed with the Covidien board of directors various matters relating to a potential acquisition of Covidien by Medtronic. Detailed discussions ensued throughout this meeting. At the conclusion of this meeting, the Covidien board of directors instructed members of Covidien management and representatives of Goldman Sachs to report back to the Covidien board of directors with Medtronic’s non-binding proposal once received, and planned to reconvene on May 31, 2014 in order to discuss and assess the offer and potential next steps.

On May 30, 2014, the Medtronic board of directors held a telephonic meeting, attended by members of Medtronic management, as well as representatives of Cleary Gottlieb and Perella Weinberg. Medtronic management reviewed with the Medtronic board of directors management’s proposed communications and integration strategy in the event the parties agreed to effect a transaction. Representatives of Medtronic management and Perella Weinberg and the Medtronic board of directors then discussed pricing considerations and, following extensive discussion, the Medtronic board of directors unanimously authorized Mr. Ishrak to present to Covidien a non-binding proposal of $90 per Covidien share (consisting of approximately $32.69 per Covidien share in cash and a fixed amount of stock having a then-current value of approximately $57.31 per share) in a transaction in which Medtronic’s shareholders would own approximately 70% of the combined company which would be domiciled in Ireland.

Following the Medtronic board meeting, Mr. Ishrak called Mr. Almeida to relay the non-binding proposal orally. Medtronic then delivered a preliminary, non-binding proposal letter to Covidien, in which Medtronic proposed to acquire Covidien for $90 per ordinary share on a fully diluted basis, consisting of the cash and stock mix discussed at the May 30, 2014 Medtronic board meeting as described above. It also noted that the proposal was subject to satisfactory completion of due diligence and negotiation of mutually acceptable definitive written agreements as well as receipt of board approvals of both companies.

On May 31, 2014, the Covidien board of directors held a telephonic meeting, attended by members of Covidien management and representatives of Wachtell Lipton and Goldman Sachs. Mr. Almeida described the details of Medtronic’s proposal to the Covidien board of directors, including the proposed consideration and the resulting percentage ownership of the combined company that Covidien shareholders would own immediately following closing. Thereafter, representatives of Goldman Sachs reviewed with the Covidien board of directors an updated financial analysis of a potential transaction with Medtronic, and the key terms and conditions contained in Medtronic’s offer, including price, the mix of cash and stock consideration, potential transaction structure and timing. Representatives of Goldman Sachs also reviewed key diligence items that would be necessary in order to better inform the Covidien board of directors and management about Medtronic’s view of the pro forma financial and operating metrics of the combined company. Representatives of Goldman Sachs also described to the Covidien board of directors the nature, scope and tone of Goldman Sachs’ follow-up discussion with Perella Weinberg after the receipt of the proposal, noting that the purpose of the discussion was to clarify certain points contained in Medtronic’s offer and to request follow-up information regarding Medtronic’s

 

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proposal. Detailed discussion ensued throughout this review. At the conclusion of the meeting, the Covidien board of directors instructed Goldman Sachs to contact Perella Weinberg to inform them that the offer, while constructive, undervalued Covidien and would need to be improved in order to warrant moving forward with negotiations regarding a potential transaction. Following the meeting, Goldman Sachs called Perella Weinberg to convey that message.

Later in the day on May 31, 2014, following discussions among Medtronic management and representatives of Perella Weinberg and Cleary Gottlieb, representatives of Perella Weinberg called representatives of Goldman Sachs to report that Medtronic management would not go back to the Medtronic board of directors to discuss the proposed transaction without specific guidance from Covidien regarding a proposal that the Covidien board of directors would be likely to find attractive. Also on May 31, 2014, representatives of Goldman Sachs requested, and Perella Weinberg provided on June 1, 2014 at Medtronic’s direction, additional data to facilitate Covidien’s evaluation of Medtronic’s non-binding proposal.

On June 1, 2014, the Covidien board of directors held a telephonic meeting, attended by members of Covidien management, as well as representatives of Wachtell Lipton and Goldman Sachs. Representatives of Goldman Sachs described the follow-up discussions with Perella Weinberg after receipt of the proposal. Representatives of Goldman Sachs also described to the Covidien board of directors the due diligence efforts undertaken by Covidien management and Goldman Sachs with respect to the additional data received from Medtronic and reviewed with the Covidien board of directors an updated financial analysis of a potential transaction with Medtronic. A discussion ensued regarding a response to Medtronic regarding valuation (including the mix of cash/stock consideration and factors to consider in computing the exchange ratio). After further discussion and review, the Covidien board of directors determined to make a preliminary, non-binding counter-proposal to Medtronic with a price per Covidien ordinary share between $94 and $95 and a mix of cash and stock and other terms on a basis reflecting the discussion at the meeting, and instructed Goldman Sachs to respond to Perella Weinberg with such non-binding counter proposal.

Following the Covidien board meeting, on June 1, 2014, representatives of Goldman Sachs discussed with representatives of Perella Weinberg Covidien’s response to the Medtronic proposal and informed them that the Covidien board of directors was prepared to move forward if Medtronic was willing to revise its prior non-binding proposal such that (i) the cash portion of the proposal was increased by $4 per Covidien ordinary share, and (ii) the exchange ratio was based on the 30-day volume weighted average trading price of Medtronic shares as of May 30, 2014 (which, together, would imply that the aggregate consideration to be paid to Covidien shareholders, based on the closing trading price of Medtronic stock on May 30, 2014, would be approximately $95 per ordinary share). Perella Weinberg stated that they would discuss the foregoing proposal with Medtronic.

On June 2, 2014, Mr. Almeida and Mr. Ishrak spoke by telephone regarding Medtronic’s proposal and Covidien’s counterproposal. Mr. Ishrak indicated that Covidien’s counterproposal made on June 1, 2014 was beyond what he believed the Medtronic board of directors would be willing to pay. During the conversation, Mr. Ishrak and Mr. Almeida discussed whether there might be a price between Medtronic’s $90 per share proposal and Covidien’s counterproposal that each side might consider as a reasonable compromise. As part of this discussion, Mr. Ishrak indicated that he believed that the Medtronic board of directors would be supportive of a transaction that valued Covidien at $92 per Covidien ordinary share. Mr. Almeida stated that he believed that the Covidien board of directors might consider this too low and stated that he would be prepared to present to the Covidien board of directors a transaction that valued Covidien at $92.50 per Covidien ordinary share. At the conclusion of their discussion, Mr. Almeida and Mr. Ishrak agreed to present to their respective boards a proposed combination of the two companies at a price of $92.50 per Covidien ordinary share that would result in Medtronic shareholders owning approximately 70% of the combined company and Covidien shareholders owning approximately 30% of the combined company and otherwise consistent with the terms presented by Goldman Sachs. Shortly thereafter, Goldman Sachs and Perella Weinberg spoke to confirm the terms of the proposal discussed by Messrs. Almeida and Ishrak.

 

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On June 2, 2014, following Mr. Almeida’s and Mr. Ishrak’s discussion, the Covidien board of directors held a telephonic meeting, attended by members of Covidien management and representatives of Wachtell Lipton and Goldman Sachs. Mr. Almeida reported to the Covidien board of directors that during a telephone conversation earlier in the afternoon, he and Mr. Ishrak reviewed Medtronic’s May 30, 2014 proposal and the feedback on that proposal that the Covidien board of directors had provided to Medtronic through Goldman Sachs’ conversation with Perella Weinberg. Mr. Almeida advised the Covidien board of directors that, based on his conversations with Mr. Ishrak, he expected that Medtronic would deliver a revised written non-binding cash and stock proposal with a value of $92.50 per share to Covidien the following day. Mr. Almeida then discussed matters relating to next steps in moving forward with a potential transaction with Medtronic should the Covidien board of directors decide to proceed, including determining the exchange ratio, the structure of the potential transaction and the timing to be in a position for final board approval to execute definitive transaction agreements. Detailed discussions ensued throughout this meeting. At the conclusion of the meeting, the Covidien board of directors instructed Covidien management and Covidien’s advisors to continue discussions and negotiations with Medtronic and requested that Mr. Almeida continue to keep the Covidien board of directors apprised of further discussions and developments with respect to a potential transaction with Medtronic.

On June 3, 2014, the Medtronic board of directors held a telephonic meeting, attended by members of Medtronic management, as well as representatives of Cleary Gottlieb and Perella Weinberg. Mr. Ishrak updated the Medtronic board of directors on interactions between Medtronic, Covidien and their respective advisors since the last meeting of the Medtronic board on May 30. Medtronic management then presented a comparative financial analysis of the proposed transaction at various prices, focusing on the proposed price of $92.50 per Covidien ordinary share based on the 30-day volume weighted average trading price for Medtronic shares. Representatives of Perella Weinberg then presented a preliminary financial analysis of the proposed transaction. Members of the Medtronic board of directors asked questions and discussed the presentations and related matters throughout the meeting and Medtronic management and representatives of Perella Weinberg and Cleary Gottlieb responded to comments and questions from the directors. Following extensive discussion of the Medtronic board of directors of the proposed terms, the Medtronic board unanimously expressed their approval of the proposed terms and authorized management and Medtronic’s advisors to continue to move forward with the transaction, including negotiation of other terms, completion of confirmatory due diligence and preparation for a public announcement.

On June 3, 2014, Medtronic delivered a revised non-binding proposal letter to Covidien, in which Medtronic proposed to acquire Covidien for consideration consisting of (i) $35.19 per ordinary share in cash and (ii) 0.956 shares of the combined company per Covidien ordinary share, which, taken together, was valued at approximately $92.50 per Covidien ordinary share using the 30-day volume weighted average trading price of Medtronic shares as of June 2, 2014. Based on the closing price of shares of Medtronic common stock on June 2, 2014, the consideration set forth in the proposal letter had a value of approximately $93.50 per Covidien ordinary share. The proposal letter indicated that Covidien’s shareholders would own approximately 30% of the combined company on a pro forma basis and also noted that the proposal was subject to satisfactory completion of due diligence and negotiation of mutually acceptable definitive written agreements as well as receipt of board approvals of both companies.

On June 4, 2014, members of the Medtronic and Covidien management teams, together with representatives of Perella Weinberg, Cleary Gottlieb, Goldman Sachs and Wachtell Lipton, met in person to discuss various matters relating to the proposed transaction, including continued due diligence of both companies, the process for negotiating definitive agreements, integration planning and the strategy for post-signing communications and public relations with various constituencies.

On June 5, 2014, Cleary Gottlieb sent Wachtell Lipton initial drafts of the proposed transaction agreement, expenses reimbursement agreement and conditions to the consummation of the proposed transaction. Over the course of the subsequent days, the parties and their respective advisors negotiated and exchanged drafts of these and other transaction-related documents. The negotiations primarily focused on issues relating to conditionality

 

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with respect to changes in tax laws that would undermine the anticipated tax treatment of the combined company and subject the combined company to additional unexpected tax costs, provisions with respect to regulatory approvals, provisions regarding each board’s ability to change its recommendation in favor of the transaction, provisions restricting the solicitation of alternative transaction proposals, the grounds for terminating the transaction agreement, the amount of the termination fee that Medtronic would be obligated to pay and the circumstances that would require such payment, the circumstances in which Covidien would be required to reimburse Medtronic for its expenses (subject to the one percent limit under Irish law as described elsewhere in this joint proxy statement/prospectus), the treatment of equity awards and other Covidien employee compensation and benefit matters, the composition of the combined company’s board of directors, and the interim operating covenants of both parties pending the consummation of the transaction.

On June 8, 2014, representatives of Covidien attended a meeting with representatives of Medtronic in Chicago, Illinois at which Medtronic gave a series of presentations regarding Medtronic’s portfolio, business strategy, product pipeline and financial outlook, including Medtronic’s view of the business prospects of the combined company should the proposed transaction be completed as contemplated. Following this meeting, representatives of Covidien and Medtronic conducted a series of follow-up due diligence calls with each other over the course of the week of June 9, 2014 regarding the business prospects of the combined company, in addition to other diligence activities regarding the two companies and the business prospects of the combined company should the transaction be completed.

On June 14, 2014, the Covidien board of directors held a meeting in Dublin, Ireland, attended by members of Covidien management, as well as representatives of Wachtell Lipton, Arthur Cox, Irish legal counsel to Covidien for the transaction, and Goldman Sachs, to consider the proposed terms and documentation for a proposed acquisition of Covidien by Medtronic. Mr. Almeida summarized for the Covidien board of directors the discussions with Medtronic and Medtronic’s advisors during the past two weeks and John H. Masterson, Covidien’s Senior Vice President and General Counsel, reviewed with the Covidien board of directors the due diligence efforts and procedures undertaken by Covidien in connection with the proposed transaction. Representatives of Wachtell Lipton and Arthur Cox discussed with the Covidien board of directors an overview of the duties of directors and the Irish Takeover Rules in the context of the proposed transaction with Medtronic and the key terms of the proposed transaction agreement, the expenses reimbursement agreement and the conditions to the consummation of the proposed transaction. In addition, a representative of Arthur Cox described to the Covidien board of directors the substance of the announcement required pursuant to Rule 2.5 of the Irish Takeover Rules in connection with the proposed transaction. Also at this meeting, representatives of Goldman Sachs reviewed for the Covidien board of directors its financial analysis of the proposed transaction. A discussion ensued throughout this meeting and members of Covidien management and representatives of Goldman Sachs, Wachtell Lipton and Arthur Cox responded to comments and questions from the Covidien board of directors. Following discussion, Goldman Sachs rendered to the Covidien board of directors its oral opinion, confirmed by delivery of a written opinion dated June 15, 2014, to the effect that as of that date and based upon and subject to the assumptions and limitations set forth in its opinion, the scheme consideration proposed to be paid to Covidien shareholders in the scheme was fair to the Covidien shareholders from a financial point of view. Goldman Sachs’ opinion is more fully described under the caption “The Transactions—Opinion of Covidien’s Financial Advisor” and the full text of the written opinion of Goldman Sachs, which sets forth the assumptions and limitations in such opinion, is attached as Annex F hereto. Following these presentations and discussions, the Covidien board of directors unanimously determined that the proposed transaction agreement and the transactions contemplated thereby, including the scheme, were advisable for, fair to and in the best interests of Covidien and the Covidien shareholders, and thereby approved the acquisition and determined that the terms of the scheme were fair and reasonable. Shortly thereafter, Mr. Almeida called Mr. Ishrak to advise him of the action by the Covidien board of directors.

On June 15, 2014, the Medtronic board of directors held a meeting at its headquarters in Minneapolis to consider the proposed transaction, attended by members of Medtronic management and representatives of Perella Weinberg, Cleary Gottlieb and A&L Goodbody, Irish legal counsel to Medtronic in connection with the

 

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transaction. Members of Medtronic management summarized for the Medtronic board of directors the economic terms of the proposed transaction negotiated by the companies’ management teams, the strategic and financial benefits of the transaction, the potential timeline to closing, the results of the due diligence performed with respect to Covidien, the contemplated financing arrangements, and the communications plan following an announcement, assuming board approval. Representatives of Cleary Gottlieb discussed the directors’ fiduciary duties in connection with considering the transaction, discussed the antitrust and competition law filing requirements, process and anticipated timing, summarized the transaction structure (noting that, as previously discussed, the transaction would be taxable to Medtronic shareholders) and the terms of the proposed transaction agreement, the expenses reimbursement agreement and the transaction conditions, and (together with representatives of A&L Goodbody) reviewed certain of the principal implications of New Medtronic being an Irish company. Cleary Gottlieb representatives also noted that the proposed transaction agreement permits Covidien to agree to indemnify Covidien directors and officers in the event that they were subject to the excise tax relating to transactions involving a re-domiciling company, and noted that, if the Medtronic board of directors approved the proposed transaction at that meeting, it would need to consider whether to provide an excise tax indemnity for Medtronic directors and officers so as to put them in the same position from a tax perspective as if the excise tax, which is not applicable to other shareholders, had not been imposed. Representatives of Cleary Gottlieb noted that these indemnification arrangements would not cover any capital gains tax incurred as a result of the exchange of Covidien or Medtronic shares in connection with the transaction, and that such directors and executive officers would be responsible for such capital gains tax just like all other shareholders. Also at this meeting, representatives of Perella Weinberg reviewed for the Medtronic board of directors its financial analysis of the proposed transaction and delivered Perella Weinberg’s oral opinion to the Medtronic board of directors, confirmed by delivery of a written opinion dated June 15, 2014, to the effect that as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth in its opinion, the consideration to be received by holders of Medtronic common stock in the transaction pursuant to the proposed transaction agreement (taking into account the acquisition of Covidien by New Medtronic) proposed to be received by holders of Medtronic common stock was fair, from a financial point of view, to the holders of Medtronic common stock (other than Medtronic and its subsidiaries). Perella Weinberg’s opinion is more fully described under the caption “The Transactions—Opinion of Medtronic’s Financial Advisor” and the full text of the written opinion of Perella Weinberg, which sets forth the assumptions and limitations in such opinion, is attached as Annex E hereto. Members of the Medtronic board of directors asked questions and discussed the various presentations and related matters throughout the meeting and Medtronic management, as well as representatives of Perella Weinberg, Cleary Gottlieb and A&L Goodbody responded to comments and questions from the directors. Following these presentations and discussions, the Medtronic board of directors unanimously determined that the transactions contemplated by the proposed transaction agreement were fair to and in the best interests of Medtronic and the Medtronic shareholders, and approved the execution of the proposed transaction agreement and resolved to recommend that Medtronic shareholders vote in favor of the adoption of the plan of merger contained in the proposed transaction agreement and approved a variety of other matters relating to the transaction, including the proposed excise tax indemnity. Subsequent to the approval by the Medtronic board of directors of the transaction, representatives of Brunswick Group LLC, communications advisor for Medtronic in connection with the transaction, joined the meeting and the Medtronic board of directors and Medtronic management engaged with them in a further discussion of the transaction communications strategy.

On June 15, 2014, following the conclusion of the Medtronic board meeting, Covidien and Medtronic executed the Transaction Agreement and the expenses reimbursement agreement and publicly announced the transaction and Medtronic issued its Rule 2.5 announcement pursuant to the Irish Takeover Rules.

Recommendation of the Medtronic Board of Directors and Medtronic’s Reasons for the Transaction

At its meeting on June 15, 2014, the Medtronic board of directors unanimously approved the plan of merger contained in the Transaction Agreement and determined that the entry into the Transaction Agreement and the merger are fair to and in the best interests of Medtronic and its shareholders. The Medtronic board of directors

 

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unanimously recommends that the shareholders of Medtronic vote for the approval of the plan of merger contained in the Transaction Agreement and the revised memorandum and articles of association of New Medtronic and for the other resolutions at the Medtronic special meeting.

The Medtronic board of directors considered many factors in making its determination that the entry into the Transaction Agreement and the merger are fair to and in the best interests of Medtronic and its shareholders and recommending approval of the plan of merger contained in the Transaction Agreement and the other resolutions by the Medtronic shareholders at the Medtronic special meeting. In arriving at its determination, the Medtronic board of directors consulted with Medtronic’s management, legal advisors and financial advisor, reviewed a significant amount of information, considered a number of factors in its deliberations and concluded that the transaction is likely to result in significant strategic and financial benefits to Medtronic and its shareholders, including:

 

  The belief that the combination will support and accelerate Medtronic’s three fundamental strategies:

 

    Therapy Innovation: With its expanded portfolio of innovative products and services and ability to accelerate strategic investments and investments in technology, New Medtronic would be a preeminent leader in developing, investing in and delivering therapy and procedural innovations to address the major disease states impacting patients and healthcare costs in the United States and around the world;

 

    Globalization: With a presence in more than 150 countries, the combined entity would be better able to serve global market needs. Medtronic and Covidien have combined pro forma revenues of approximately $27 billion including approximately $13 billion from outside the U.S., of which $3.7 billion comes from emerging markets. Covidien’s extensive capabilities in emerging market R&D and manufacturing, joined with Medtronic’s demonstrated clinical expertise across a much broader product offering, significantly increases the number of attractive solutions the new company would be able to offer globally; and

 

    Economic Value: Medtronic has adopted an intense focus on aligning with its customers to create more value in healthcare systems around the world by combining products, services and insights into solutions aimed at expanding access and reducing healthcare costs. With Covidien, Medtronic would be able to provide a broader array of complementary therapies and solutions that can be packaged to drive more value and efficiency in healthcare systems;

 

  the belief that the combination will also result in the diversification of Medtronic’s revenue base due to a stronger foundation in emerging market R&D and manufacturing and the addition of industry leading capabilities and expertise in general and advanced surgery and patient monitoring;

 

  the belief that, since the transaction would be expected to support and accelerate Medtronic’s three fundamental strategies, diversify Medtronic’s revenue base, and for the other reasons considered by the Medtronic board of directors, the transaction will result in enhanced value for Medtronic shareholders relative to Medtronic continuing as a standalone company;

 

  the opportunities to employ the best practices of each company to drive greater efficiencies, and from realization of economies in purchasing due to the greater scale of New Medtronic;

 

  the belief that the Medtronic management team, working together with members of Covidien management, will be able to successfully integrate the two companies;

 

  the anticipated aggregate annual pre-tax cost synergies of at least $850 million by the end of Medtronic’s fiscal year 2018, with additional possible revenue synergies;

 

  the ability of New Medtronic, as an Irish-domiciled company, to access substantially all of Covidien’s cash on a going-forward basis, and to accelerate strategic investments and investments in technology in the U.S.;

 

  the expectation that the combined company’s effective tax rate will be reduced by about one to two percentage points compared with the companies’ estimated blended rate; and

 

  the anticipated strong credit profile of the combined company, with increased earnings and cash flow and better access to capital markets as a result of enhanced size and business diversification despite a potential ratings downgrade as a result of the transaction.

 

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These beliefs are based in part on the following factors that the Medtronic board of directors considered:

 

  its knowledge and understanding of the Medtronic business, operations, financial condition, earnings, strategy and future prospects;

 

  information and discussions with Medtronic’s management, in consultation with Perella Weinberg, regarding Covidien business, operations, financial condition, earnings, strategy and future prospects, and the results of Medtronic’s due diligence review of Covidien;

 

  the fact that the board of directors of New Medtronic following completion of the transaction would consist of up to 11 Medtronic directors then in office plus two members of the Covidien board of directors to be selected by the Nominating and Corporate Governance Committee of the Medtronic board of directors in consultation with Covidien, and that senior management of Medtronic would become the senior management of New Medtronic;

 

  the current and prospective economic climate generally and the competitive climate in the medical device and supplies industries, including the potential for further consolidation;

 

  the opinion of Perella Weinberg rendered to the Medtronic board of directors that, as of June 15, 2014, and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth in its written opinion, the merger consideration of one New Medtronic ordinary share to be received for each share of Medtronic common stock (taking into account the acquisition) as provided for in the Transaction Agreement was fair, from a financial point of view, to the holders of Medtronic common stock (other than Medtronic and its subsidiaries), and the related presentation and financial analysis of Perella Weinberg provided to the board of directors of Medtronic in connection with the rendering of its opinion, as more fully described in the section entitled “—Opinion of Medtronic’s Financial Advisor”;

 

  the likelihood that the transaction will be completed on a timely basis and the belief that antitrust and competition clearances could be obtained without the imposition of conditions that would be materially adverse to the combined company;

 

  the limited number and nature of the conditions to Covidien’s obligation to complete the transaction;

 

  the fact that the Medtronic board of directors may change its recommendation to Medtronic’s shareholders in response to a material event that was not known to it as of the date of the Transaction Agreement, subject to certain limitations, if the Medtronic board of directors has concluded in good faith (after consultation with Medtronic’s outside legal counsel and financial advisor) that the failure to take such action would be inconsistent with the directors’ fiduciary duties;

 

  the fact that the transaction is subject to approval by the Medtronic shareholders;

 

  that, subject to certain limited exceptions, Covidien is prohibited from soliciting, participating in any discussions or negotiations with respect to, providing information to any third party with respect to, or entering into any agreement providing for, the acquisition of Covidien;

 

  that Covidien must reimburse certain of Medtronic’s expenses in connection with the transaction in an amount up to 1% of the equity value of Covidien if the Transaction Agreement is terminated under the circumstances specified in the expenses reimbursement agreement;

 

  the fact that Medtronic’s obligation to consummate the transaction is subject to a condition that there shall have been no change in applicable law (whether or not such change in law is yet effective) with respect to Section 7874 of the U.S. Code (or any other U.S. tax law), or any official interpretations thereof as set forth in published guidance by the IRS (other than IRS News Releases) (whether or not such change in official interpretation is yet effective), and there having been no bill that would implement such a change which has been passed in identical (or substantially identical such that a conference committee is not required prior to submission of such legislation for the President’s approval or veto) form by both houses of Congress and for which the time period for the President of the United States to sign or veto such bill has not yet elapsed, in each case, that, once effective, in the opinion of nationally recognized U.S. tax counsel, would cause New Medtronic to be treated as a U.S. domestic corporation for U.S. federal income tax purposes; and

 

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  the fixed exchange ratio for the acquisition of Covidien will not be increased to compensate Covidien shareholders in the event of a decrease in the share price of Medtronic’s common stock prior to the effective time, and the terms of the Transaction Agreement do not include termination rights for Covidien triggered in the event of an increase in the value of Covidien relative to the value of Medtronic.

The Medtronic board of directors weighed these factors against a number of uncertainties, risks and potentially negative factors relevant to the transaction, including the following:

 

  the fixed exchange ratio for the acquisition of Covidien will not be reduced in the event of an increase in the share price of Medtronic’s common stock prior to the effective time, and the terms of the Transaction Agreement do not include termination rights for Medtronic triggered in the event of a decrease in the value of Covidien relative to the value of Medtronic;

 

  the adverse impact that business uncertainty prior to the closing of the transaction and during the post-closing integration period could have on the ability of both Medtronic and Covidien to attract, retain and motivate key personnel;

 

  the challenges inherent in the combination of two business enterprises of the size and scope of Medtronic and Covidien, including the possibility that the anticipated cost savings and synergies and other benefits sought to be obtained from the transaction might not be achieved in the time frame contemplated or at all and the other numerous risks and uncertainties which could adversely affect New Medtronic’s operating results;

 

  the risk that the forecasted results in the unaudited prospective financial information of Medtronic and Covidien would not be achieved in the amounts or at the times anticipated;

 

  the risk that a change in applicable law with respect to Section 7874 of the Code or any other U.S. tax law, or official interpretations thereof, could cause New Medtronic to be treated as a U.S. domestic corporation for U.S. federal income tax purposes following the consummation of the transaction or otherwise adversely affect New Medtronic;

 

  that the merger is expected to be taxable for U.S. federal income tax purposes to the Medtronic shareholders, which could particularly affect long-term Medtronic shareholders with a low basis in their shares and could, among other things, lead them to sell some of their shares to provide the cash to pay the tax;

 

  the risk of negative effects on Medtronic’s reputation among various stakeholders based on the fact that New Medtronic would be an Irish-domiciled company;

 

  the risk that the transaction might not be consummated in a timely manner or at all;

 

  that failure to complete the transaction could cause Medtronic to incur significant fees and expenses and could lead to negative perceptions among investors, potential investors and customers;

 

  the limited circumstances under which Medtronic could terminate the Transaction Agreement or refuse to consummate the transaction;

 

  that, subject to certain limited exceptions, Medtronic is prohibited during the term of the Transaction Agreement from soliciting, participating in any discussions or negotiations with respect to, providing information to any third party with respect to, or entering into any agreement providing for, the acquisition of Medtronic and that Medtronic is prohibited from terminating the Transaction Agreement to enter into any agreement providing for the acquisition of Medtronic;

 

  the risk that, pursuant to the terms of the Transaction Agreement, Medtronic may become obligated to pay a termination fee of $850 million if the Transaction Agreement is terminated under certain circumstances specified in the Transaction Agreement;

 

  that Medtronic is limited to recovering its documented, specific and quantifiable third-party costs and expenses from Covidien in an amount up to 1% of the equity value of Covidien if the Transaction Agreement is terminated under the circumstances specified in the expenses reimbursement agreement;

 

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  the restrictions on Medtronic’s operations until completion of the transaction which could have the effect of preventing Medtronic from pursuing other strategic transactions during the pendency of the Transaction Agreement as well as taking certain other actions relating to the conduct of its business without the prior consent of Covidien; and

 

  the risks of the type and nature described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

In considering the recommendation of the Medtronic board of directors, Medtronic shareholders should be aware that directors and executive officers of Medtronic have interests in the proposed transaction that are different from, or in addition to, any interests they might have as shareholders. See “—Interests of Certain Persons in the Transaction—Medtronic” beginning on page [] of this joint proxy statement/prospectus.

The Medtronic board of directors concluded that the uncertainties, risks and potentially negative factors relevant to the transaction were outweighed by the potential benefits that it expected Medtronic and the Medtronic shareholders would achieve as a result of the transaction.

This discussion of the information and factors considered by the Medtronic board of directors includes the principal positive and negative factors considered by the Medtronic board of directors, but is not intended to be exhaustive and may not include all of the factors considered by the Medtronic board of directors. In view of the wide variety of factors considered in connection with its evaluation of the transaction, and the complexity of these matters, the Medtronic board of directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the transaction and to make its recommendations to the Medtronic shareholders. Rather, the Medtronic board of directors viewed its decisions as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the Medtronic board of directors may have given differing weights to different factors.

Recommendation of the Covidien Board of Directors and Covidien’s Reasons for the Transaction

At its meeting on June 14, 2014 in Dublin, Ireland, the members of the Covidien board of directors unanimously determined that the Transaction Agreement and the transaction contemplated thereby, including the scheme, were advisable for, fair to and in the best interests of Covidien and the Covidien shareholders, and that the terms of the scheme were fair and reasonable. The Covidien board of directors unanimously recommends that the shareholders of Covidien vote in favor of the scheme at the special Court-ordered meeting and in favor of the scheme and other resolutions at the EGM.

In evaluating the Transaction Agreement and the proposed transaction, the Covidien board of directors consulted with management, as well as Covidien’s internal and outside legal counsel and its financial advisor, and considered a number of factors, weighing both perceived benefits of the transaction as well as potential risks of the transaction.

The Covidien board of directors considered the following factors that it believes support its determinations and recommendations:

Aggregate Value and Composition of the Consideration

 

  that the scheme consideration had an implied value per Covidien ordinary share of $93.22, based on the closing price of Medtronic shares as of June 13, 2014 (the last trading day prior to announcement of the transaction), which represented a 29.4% premium to the closing price per Covidien ordinary share on the same date, which the Covidien board of directors viewed as an attractive valuation relative to other transactions and peer comparisons;

 

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  that the equity component of the scheme consideration offers Covidien shareholders the opportunity to participate in the future earnings and growth of the combined company, while the cash portion of the scheme consideration provides Covidien shareholders with immediate certainty of value;

 

  that the fixed exchange ratio provides certainty to the Covidien shareholders as to their pro forma percentage ownership of approximately 30% of the combined company;

Synergies and Strategic Considerations

 

  the potential for Covidien shareholders, as shareholders of the combined company, to benefit to the extent of their interest in the combined company from the synergies expected to result from the transaction, which are projected to be at least $850 million (on a pre-tax basis) by the end of New Medtronic’s fiscal year 2018;

 

  the belief of the Covidien board of directors that the combined company will have a comprehensive product portfolio, a diversified growth profile and broad geographic reach;

 

  the Covidien board of directors’ familiarity with and understanding of Covidien’s business, results of operations, financial and market position, and its expectations concerning Covidien’s future prospects;

 

  information and discussions with Covidien’s management, in consultation with Goldman Sachs, regarding Medtronic’s business, results of operations, financial and market position, and Medtronic management’s expectations concerning Covidien’s business prospects, and historical and current trading prices of Medtronic shares;

 

  information and discussions regarding the benefits of size and scale, the expected credit profile and effective tax rate of the combined company and the expected pro forma effect of the proposed transaction;

 

  the Covidien board of directors’ ongoing evaluation of strategic alternatives for maximizing shareholder value over the long term, including senior management’s standalone plan, and the potential risks, rewards and uncertainties associated with such alternatives, and the Covidien board’s belief that the proposed transaction with Medtronic was the most attractive option available to Covidien shareholders;

 

  the perceived benefits of New Medtronic being organized under the laws of Ireland, including the significant global cash management flexibility of the combined company;

Opinion of Financial Advisor

 

  the opinion of Goldman Sachs to the Covidien board of directors that, as of June 15, 2014 and based upon and subject to the assumptions and limitations set forth therein, the scheme consideration is fair to the Covidien shareholders (other than Medtronic and its affiliates) from a financial point of view, together with the financial analyses presented by Goldman Sachs to the Covidien board of directors in connection with the delivery of the opinion, as further described under “—Opinion of Covidien’s Financial Advisor”;

Likelihood of Completion of the Transaction

 

  the likelihood that the transaction will be consummated, based on, among other things:

 

    the closing conditions to the scheme and acquisition, including the fact that the obligations of Medtronic are not subject to a financing condition;

 

    that Medtronic has obtained committed debt financing for the transaction from a reputable financing source in accordance with the “funds certain” requirement of the Irish Takeover Rules; and

 

    the commitment made by Medtronic to cooperate and use reasonable best effort to obtain regulatory clearances, including under the HSR Act and the EC Merger Regulation, including to divest assets or commit to limitations on the businesses of Covidien and Medtronic to the extent provided in the Transaction Agreement, as discussed further under “The Transaction—Regulatory Approvals Required”;

 

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Favorable Terms of the Transaction Agreement and Expenses Reimbursement Agreement

 

  the terms and conditions of the Transaction Agreement and the expenses reimbursement agreement and the course of negotiations of such agreements, including, among other things:

 

    the ability of Covidien, under certain circumstances, to provide information to and to engage in discussions or negotiations with a third party that makes an unsolicited acquisition proposal, as further described under “The Transaction Agreement—Covenants and Agreements”;

 

    the ability of the Covidien board of directors, under certain circumstances, to change its recommendation to Covidien shareholders concerning the scheme, as further described under “The Transaction Agreement—Covenants and Agreements”;

 

    the ability of the Covidien board of directors to terminate the Transaction Agreement under certain circumstances, including to enter into an agreement providing for a superior proposal, subject to certain conditions (including payment of an expense reimbursement to Medtronic and certain rights of Medtronic giving it the opportunity to match the superior proposal), as further described under “The Transaction Agreement—Covenants and Agreements”;

 

    the terms of the Transaction Agreement that restrict Medtronic’s ability to solicit alternative business combination transactions and to provide confidential due diligence information to, or engage in discussions with, a third party interested in pursuing an alternative business combination transaction, as further discussed under “The Transaction Agreement—Covenants and Agreements”;

 

    the obligation of Medtronic to pay Covidien a termination fee of $850 million upon termination of the Transaction Agreement under specified circumstances;

 

    the requirement that Medtronic hold a shareholder vote on the Transaction Agreement, even though the Medtronic board of directors may have withdrawn or changed its recommendation, and the inability of Medtronic to terminate the Transaction Agreement to enter into an agreement for a superior proposal;

 

    the Covidien board of directors’ belief that the expenses reimbursement payment to be made to Medtronic upon termination of the Transaction Agreement under specified circumstances, which is capped at an amount equal to 1% of the total value attributable to the entire issued share capital of Covidien under the acquisition, is much less of a financial impediment to another party making a superior acquisition proposal after execution of the Transaction Agreement than is typical in U.S. transactions, which customarily provide for a fixed break-up fee of a substantially greater amount, and is not likely to significantly deter another party from making such an acquisition proposal; and

 

    the governance arrangements contained in the Transaction Agreement, which provide that, after completion of the scheme, the board of directors of New Medtronic will consist of no more than eleven individuals who are members of the Medtronic board of directors immediately prior to the completion of the transaction and two individuals who are members of the Covidien board of directors immediately prior to the completion of the transaction, to be selected by the Nominating and Corporate Governance Committee of the Medtronic board of directors in consultation with Covidien.

The Covidien board of directors also considered a variety of risks and other countervailing factors, including:

Taxable Transaction

 

  that the scheme will be a fully taxable transaction for Covidien shareholders for U.S. federal income tax purposes;

Fluctuations in Share Price

 

 

that the fixed exchange ratio will not adjust downwards to compensate for changes in the price of Covidien or Medtronic shares prior to the consummation of the transaction, and the terms of the Transaction Agreement do not include termination rights triggered by a decrease in the value of Medtronic relative to the

 

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value of Covidien (although the Covidien board of directors determined that the exchange ratio was appropriate and the risks acceptable in view of the relative intrinsic values and financial performance of Covidien and Medtronic and the historic trading prices of Covidien and Medtronic shares);

Limitations on Covidien’s Business Pending Completion of the Transaction

 

  the restrictions on the conduct of Covidien’s business during the pendency of the transaction, which may delay or prevent Covidien from undertaking business opportunities that may arise or may negatively affect Covidien’s ability to attract and retain key personnel;

 

  the terms of the Transaction Agreement that restrict Covidien’s ability to solicit alternative business combination transactions and to provide confidential due diligence information to, or engage in discussions with, a third party interested in pursuing an alternative business combination transaction, as further discussed under “The Transaction AgreementCovenants and Agreements,” although the Covidien board of directors believed that such terms were reasonable and not likely to significantly deter another party from making a superior acquisition proposal;

Possible Disruption of Covidien’s Business

 

  the potential for diversion of management and employee attrition and the possible effects of the announcement and pendency of the transaction on customers and business relationships;

Risks of Delays or Non-Completion

 

  the amount of time it could take to complete the transaction, including the fact that completion of the transaction depends on factors outside of Covidien’s control, and that there can be no assurance that the conditions to the transaction will be satisfied even if the scheme is approved by Covidien shareholders;

 

  the possibility of non-consummation of the transaction and the potential consequences of non-consummation, including the potential negative impacts on Covidien, its business and the trading price of its shares;

Uncertainties Following Completion

 

  the difficulty and costs inherent in integrating diverse, global businesses and the risk that the cost savings, synergies and other benefits expected to be obtained as a result of the transaction might not be fully or timely realized; and

Other Risks

 

  the risks of the type and nature described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward Looking Statements.

In considering the recommendation of the Covidien board of directors, you should be aware that directors and executive officers of Covidien have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders. See “—Interests of Certain Persons in the Transaction” beginning on page [].

The Covidien board of directors concluded that the uncertainties, risks and potentially negative factors relevant to the transaction were outweighed by the potential benefits that it expected Covidien and its shareholders would achieve as a result of the transaction.

This discussion of the information and factors considered by the Covidien board of directors includes the principal positive and negative factors considered by the Covidien board of directors, but is not intended to be exhaustive and may not include all of the factors considered by the Covidien board of directors. In view of the

 

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wide variety of factors considered in connection with its evaluation of the transaction, and the complexity of these matters, the Covidien board of directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the transaction and to make its recommendations to the Covidien shareholders. Rather, the Covidien board of directors viewed its decisions as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the Covidien board of directors may have given differing weights to different factors.

Opinion of Medtronic’s Financial Advisor

The Medtronic board of directors retained Perella Weinberg to act as its financial advisor in connection with the transaction. The board of directors selected Perella Weinberg based on Perella Weinberg’s qualifications, expertise and reputation and its knowledge of the business and affairs of Medtronic and Covidien and the industries in which Medtronic and Covidien conduct their respective businesses. Perella Weinberg, as part of its investment banking business, is continually engaged in performing financial analyses with respect to businesses and their securities in connection with mergers and acquisitions, leveraged buyouts and other transactions as well as for corporate and other purposes.

On June 15, 2014, Perella Weinberg rendered its oral opinion, subsequently confirmed in writing, to the Medtronic board of directors that, as of such date and based upon and subject to the various assumptions made, procedures followed, matters considered and qualifications and limitations set forth therein, the merger consideration of one New Medtronic share to be received for each share of Medtronic common stock (taking into account the acquisition of Covidien) as provided for in the Transaction Agreement was fair, from a financial point of view, to the holders of Medtronic common stock (other than Medtronic and its subsidiaries).

The full text of Perella Weinberg’s written opinion, dated June 15, 2014, which sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken by Perella Weinberg, is attached as Annex E and is incorporated by reference herein. Holders of Medtronic common stock are urged to read Perella Weinberg’s opinion carefully and in its entirety. The opinion does not address Medtronic’s underlying business decision to enter into the transaction or the relative merits of the transaction as compared with any other strategic alternative that may have been available to Medtronic. The opinion does not constitute a recommendation to any holder of Medtronic common stock or Covidien ordinary shares as to how such holder should vote or otherwise act with respect to the transaction or any other matter and does not in any manner address the prices at which Medtronic common stock or Covidien ordinary shares will trade at any time. In addition, Perella Weinberg expressed no opinion as to the fairness of the transaction, or any consideration received in connection with the transaction, to the holders of any other class of securities, creditors or other constituencies of Medtronic. Perella Weinberg provided its opinion for the information and assistance of the Medtronic board of directors in connection with, and for the purposes of its evaluation of, the transaction. This summary is qualified in its entirety by reference to the full text of the opinion.

In arriving at its opinion, Perella Weinberg, among other things:

 

  reviewed certain publicly available financial statements and other business and financial information with respect to Covidien and Medtronic, including research analyst reports;

 

  reviewed certain publicly available financial projections concerning the business and financial prospects of Covidien and Medtronic (which we refer to in this section as the “Public Forecasts”);

 

  reviewed certain internal analyses and forecasts (which we refer to in this section as the “Medtronic Forecasts”), and other financial and operating data relating to the business of Medtronic, in each case, prepared by the management of Medtronic;

 

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  reviewed certain internal analyses and forecasts (which we refer to in this section as the “Covidien Forecasts”), and other financial and operating data relating to the business of Covidien, in each case, prepared by management of Covidien and provided to Perella Weinberg by management of Medtronic;

 

  reviewed an alternative version of the Covidien Forecasts incorporating certain adjustments thereto made by the management of Medtronic (which we refer to in this section as the “Adjusted Covidien Forecasts”), and discussed with the management of Medtronic its assessments as to the relative likelihood of achieving the future financial results reflected in the Covidien Forecasts and the Adjusted Covidien Forecasts;

 

  reviewed information relating to certain operational and financial benefits anticipated to result from the consummation of the transaction (which we refer to in this section as the “Anticipated Synergies”), in each case, prepared by the management of Medtronic;

 

  discussed the past and current operations, financial condition and prospects of Covidien and Medtronic, including information relating to the Anticipated Synergies, with the management of Medtronic;

 

  compared the financial performance of Covidien and Medtronic with that of certain publicly-traded companies which Perella Weinberg believed to be generally relevant;

 

  compared the financial terms of the transaction with the publicly available financial terms of certain transactions which Perella Weinberg believed to be generally relevant;

 

  reviewed the potential pro forma financial impact of the transaction on Medtronic;

 

  reviewed the historical trading prices and trading activity for Covidien ordinary shares and Medtronic common stock and compared such price and trading activity of Covidien ordinary shares and Medtronic common stock with that of securities of certain publicly-traded companies which Perella Weinberg believed to be generally relevant;

 

  participated in discussions among representatives of Covidien and Medtronic and their respective financial and legal advisors;

 

  reviewed a draft dated June 15, 2014 of the Transaction Agreement, a draft dated June 15, 2014 of the expenses reimbursement agreement and a draft dated June 15, 2014 of the Rule 2.5 Announcement, and certain other documents; and

 

  conducted such other financial studies, analyses and investigations, and considered such other factors, as Perella Weinberg deemed appropriate.

In arriving at its opinion, Perella Weinberg assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information supplied or otherwise made available to Perella Weinberg (including information that was available from generally recognized public sources) for purposes of its opinion and further assumed, with the consent of Medtronic, that the information furnished by the managements of Medtronic and Covidien for purposes of its analysis did not contain any material omissions or misstatements of material fact. With respect to the Medtronic Forecasts, Perella Weinberg was advised by the management of Medtronic and assumed, with the consent of Medtronic, that such forecasts were reasonably prepared on bases reflecting the best estimates available at the time and the good faith judgments of the management of Medtronic as to the future financial performance of Medtronic and the other matters covered thereby and Perella Weinberg expressed no view as to the assumptions on which they were based. With respect to the Covidien Forecasts, Perella Weinberg assumed, with the consent of Medtronic, that such forecasts were reasonably prepared on bases reflecting the best estimates available at the time and the good faith judgments of the management of Covidien as to the future financial performance of Covidien and the other matters covered thereby and Perella Weinberg expressed no view as to the assumptions on which they were based. With respect to the Adjusted Covidien Forecasts, Perella Weinberg assumed, with the consent of Medtronic, that such forecasts were reasonably prepared on bases reflecting the best estimates available at the time and the good faith judgments of the management of Medtronic as to the future financial performance of Covidien and the other matters covered thereby and Perella Weinberg expressed no view as to the assumptions on which they were based. Based on the

 

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assessments of the management of Medtronic as to the relative likelihood of achieving the future financial results reflected in the Covidien Forecasts and the Adjusted Covidien Forecasts, Perella Weinberg used, at the direction of Medtronic, the Adjusted Covidien Forecasts for purposes of its opinion. While senior executives of Covidien presented their views to Perella Weinberg on the past and current business, operations, financial condition and prospects of Covidien, Perella Weinberg did not have discussions with management of Covidien on these matters. Perella Weinberg assumed, with the consent of Medtronic, that the Anticipated Synergies (including the amount, timing and achievability thereof) would be realized in the amounts and at the times projected by the management of Medtronic, and Perella Weinberg expressed no view as to the assumptions on which the Anticipated Synergies were based. Perella Weinberg relied without independent verification upon the assessments by the management of Medtronic of the timing and risks associated with the integration of Medtronic and Covidien. In arriving at its opinion, Perella Weinberg did not make any independent valuation or appraisal of the assets or liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities) of Covidien or Medtronic, nor was Perella Weinberg furnished with any such valuations or appraisals, nor did Perella Weinberg assume any obligation to conduct, nor did Perella Weinberg conduct, any physical inspection of the properties or facilities of Medtronic or Covidien. In addition, Perella Weinberg did not evaluate the solvency of any party to the Transaction Agreement, including under any state or federal laws relating to bankruptcy, insolvency or similar matters. Perella Weinberg assumed that the final transaction documents would not differ in any material respect from the draft transaction documents reviewed by Perella Weinberg and that the transaction would be consummated in accordance with the terms set forth in such transaction documents, without material modification, waiver or delay. In addition, Perella Weinberg assumed that in connection with the receipt of all the necessary approvals of the transaction, no delays, limitations, conditions or restrictions will be imposed that could have an adverse effect on Medtronic, Covidien, or their respective affiliates, or the contemplated benefits expected to be derived in the transaction. Perella Weinberg relied as to all legal matters relevant to rendering its opinion upon the advice of its counsel.

Perella Weinberg’s opinion addressed only the fairness from a financial point of view, as of the date thereof, of the merger consideration of one New Medtronic share to be received for each share of Medtronic common stock (taking into account the acquisition of Covidien) as provided for in the Transaction Agreement to the holders of Medtronic common stock (other than Medtronic and its subsidiaries). Perella Weinberg was not asked to, nor did it, offer any opinion as to any other term of the transaction documents or the form or structure of the transaction or the likely timeframe in which the transaction would be consummated. In addition, Perella Weinberg expressed no opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any parties to the transaction, or any class of such persons, whether relative to the consideration to be received by the holders of Medtronic common stock (other than Medtronic or any of its subsidiaries) in the merger or otherwise. Perella Weinberg did not express any opinion as to any tax or other consequences that may result from the transaction or the likelihood of any change in tax law or the consequences of any such change or any mitigation in respect thereof by the parties to the Transaction Agreement. In addition, Perella Weinberg’s opinion did not address any legal, tax, regulatory or accounting matters, as to which Perella Weinberg relied on the assessments made by Medtronic and its advisors and as to which Perella Weinberg understood Medtronic had received such advice as Medtronic deemed necessary from qualified professionals. Perella Weinberg’s opinion did not address the underlying business decision of Medtronic to enter into the transaction or the relative merits of the transaction as compared with any other strategic alternative which may have been available to Medtronic.

Perella Weinberg’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Perella Weinberg as of, the date of its opinion. It should be understood that subsequent developments may affect Perella Weinberg’s opinion and the assumptions used in preparing it, and Perella Weinberg does not have any obligation to update, revise, or reaffirm its opinion. The issuance of Perella Weinberg’s opinion was approved by a fairness committee of Perella Weinberg.

 

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Summary of Material Financial Analyses

The following is a summary of the material financial analyses performed by Perella Weinberg and reviewed by the Medtronic board of directors in connection with Perella Weinberg’s opinion and does not purport to be a complete description of the financial analyses performed by Perella Weinberg. The order of analyses described below does not represent the relative importance or weight given to those analyses by Perella Weinberg. Some of the summaries of the financial analyses include information presented in tabular format.

In order to fully understand Perella Weinberg’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Perella Weinberg’s financial analyses.

Historical Share Price Analysis

Perella Weinberg reviewed the share price performance of Medtronic and Covidien during various periods ending on June 13, 2014 (the last trading day prior to the Medtronic board of directors meeting approving the execution of the Transaction Agreement). Perella Weinberg noted that the range of low and high trading prices of Medtronic common stock during the prior 52-week period was approximately $51 to $63. Perella Weinberg noted that the range of low and high trading prices of Covidien ordinary shares during the prior 52-week period was approximately $57 to $74.

Equity Research Analyst Price Targets

Perella Weinberg reviewed and analyzed selected price targets for Medtronic common stock and Covidien ordinary shares published by equity research analysts during the period from April 25, 2014 through June 6, 2014.

The selected price targets reflect each analyst’s estimate of the future public market trading price of Medtronic common stock and Covidien ordinary shares at a date one year following the date of publication and are not discounted to reflect present values. Perella Weinberg noted that, as of June 13, 2014, the range of undiscounted equity analyst price targets for Medtronic’s common stock was between $57 and $70 per share, and the median of such targets was $66 per share and represented a premium to Medtronic’s stock price as of June 13, 2014 of 8.7%. Perella Weinberg also noted that, as of June 13, 2014, the range of undiscounted equity analyst price targets for Covidien’s ordinary shares was between $71 and $82 per share, and the median of such targets was $80 per share and represented a premium to Covidien’s share price as of June 13, 2014 of 11.1%.

The public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for either Medtronic common stock or Covidien ordinary shares, and these estimates are subject to uncertainties, including the future financial performance of Medtronic and Covidien, respectively, and future financial market conditions.

Comparable Company Analysis

Perella Weinberg reviewed and compared certain financial information for Medtronic and Covidien to corresponding financial information, ratios and public market multiples for certain publicly held companies that operate in, or are exposed to, businesses similar to those of Medtronic and Covidien. Although none of the following companies are identical to Medtronic or to Covidien, Perella Weinberg selected these companies because they had publicly traded equity securities and were deemed to be similar to Medtronic and Covidien in one or more respects including operating in the medical device, medical apparatus or medical technology manufacturing industry.

 

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Selected Publicly Traded Companies

 

  Abbott Laboratories

 

  Baxter International Inc.

 

  Becton, Dickinson and Company

 

  Boston Scientific Corp.

 

  C. R. Bard, Inc.

 

  Danaher Corporation

 

  Johnson & Johnson

 

  Smith & Nephew plc

 

  St. Jude Medical, Inc.

 

  Stryker Corp.

 

  Thermo Fisher Scientific Inc.

 

  Zimmer Holdings, Inc. (on a pro forma basis for its acquisition of Biomet)

For each of the selected companies, Perella Weinberg calculated and compared financial information and various financial market multiples and ratios based on company filings for historical information and certain publicly available financial projections for forecasted information. For Medtronic and Covidien, Perella Weinberg made calculations based on company filings for historical information and the Public Forecasts for forecasted information.

With respect to Medtronic, Covidien and each of the selected companies, Perella Weinberg reviewed enterprise value (calculated as fully diluted equity value (using the treasury method) plus debt, plus net non-operating liabilities, plus minority interest, less cash and cash equivalents), as a multiple of estimated earnings before interest, taxes, depreciation and amortization (“EBITDA”), and share price to estimated earnings per share (“EPS”), in each case presented based on fiscal years ending April 30. The per share values used for this analysis were based on the closing share prices of the companies on June 13, 2014 (other than Smith & Nephew plc, for which the per share value was based on its closing share price on May 27, 2014, the last trading day before media reports of potential transactions involving Smith & Nephew plc). The results of these analyses are summarized in the following table:

 

     EV /2015E EBITDA
Multiple
   Share Price /2015E
EPS Multiple

Medtronic

   9.4x    15.0x

Covidien

   12.2x    16.9x

Abbott Laboratories

   11.3x    17.3x

Baxter International Inc.

   10.3x    13.9x

Becton, Dickinson and Company

   10.6x    17.9x

Boston Scientific Corp.

   12.0x    15.4x

C. R. Bard, Inc.

   11.7x    16.0x

Danaher Corporation

   12.4x    20.7x

Johnson & Johnson

   11.3x    17.1x

Smith & Nephew plc

   10.3x    18.4x

St. Jude Medical, Inc.

   11.8x    15.9x

Stryker Corp.

   11.4x    16.8x

Thermo Fisher Scientific Inc.

   15.1x    16.5x

Zimmer Holdings, Inc.

   9.8x    16.8x

 

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Based on the analysis of the relevant metrics for each of the comparable companies and on the experience and judgment of Perella Weinberg, a representative range of financial multiples of the comparable companies was applied to the relevant financial statistics for Medtronic and Covidien to estimate an implied value per share of Medtronic common stock and Covidien ordinary shares. For the EV / 2015E EBITDA comparison, Perella Weinberg multiplied the relevant 2015E EBITDA multiple by the 2015E EBITDA to calculate enterprise value. To calculate the implied equity value, Perella Weinberg subtracted debt, non-operating liabilities and minority interest and added cash and cash equivalents. Perella Weinberg calculated implied value per share by dividing the implied equity value by the fully diluted shares (using the treasury method). For the Share Price / 2015E EPS comparison, Perella Weinberg multiplied the relevant 2015E EPS multiple by the 2015E EPS to calculate implied value per share.

Based on Medtronic’s and Covidien’s fully diluted equity values (using the treasury method), Perella Weinberg estimated the implied value per share of Medtronic common stock and the implied value per ordinary share of Covidien, in each case as of June 13, 2014, as follows:

 

     Comparable Company Multiple
Representative Range
     Implied Value Per Share  

Medtronic

     

EV / 2015E EBITDA

     9.0x – 11.0x       $ 58 – $70   

Share Price / 2015E EPS

     13.0x – 17.0x       $ 53 – $69   

Covidien

     

EV / 2015E EBITDA

     10.5x – 12.5x       $ 61 – $74   

Share Price / 2015E EPS

     15.0x – 17.0x       $ 64 – $73   

Although the selected companies were used for comparison purposes, no business of any selected company was either identical or directly comparable to either Medtronic’s or Covidien’s business. Accordingly, Perella Weinberg’s comparison of selected companies to Medtronic and Covidien and analysis of the results of such comparisons was not purely mathematical, but instead necessarily involved complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the relative values of the selected companies.

Precedent Transaction Analysis

Using publicly available information, Perella Weinberg reviewed the terms of selected precedent transactions involving companies that operated in, or were exposed to, the medical technology or other healthcare industry. Perella Weinberg selected these transactions in the exercise of its professional judgment and experience because Perella Weinberg deemed them to be most similar in size, scope and impact on the industry to Covidien or otherwise relevant to the transaction. No company or transaction was, however, identical to Covidien or the transaction.

For each transaction, Perella Weinberg calculated and compared the resulting enterprise value in the transaction as a multiple of EBITDA over the last twelve months publicly reported prior to the announcement of the transaction (referred to as LTM EV/EBITDA) and the ratio of the purchase price per share to the earnings per share of the target over the twelve months prior to the announcement of the transaction (referred to as LTM P/E). In addition, for each transaction, where available, Perella Weinberg calculated the premiums of the offer price in the transaction to the target company’s closing stock price 30 days prior to the announcement of the transaction (except where otherwise noted in the tables below).

 

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Medical Technology

 

  Acquirer  

Target

  Announcement
Date
    Transaction
Value
(billions of USD)
    LTM P/E     LTM EV /
EBITDA
    30-day
Premium
 

Zimmer Holdings, Inc.

  Biomet Inc.     4/24/14      $ 13.4        18.1x        12.2x        N/A(1)   

Valeant Pharmaceuticals International Inc.

  Allergan Inc.     4/22/14      $ 53.8        35.5x (2)      23.7x (2)      39%(2)   

Johnson & Johnson

  Synthes Inc.     4/27/11      $ 19.7        23.1x        12.2x        36%(3)   

Hologic Inc.

  Cytyc Corporation     5/20/07      $ 6.1        35.5x        24.1x        32%   

Boston Scientific Corp.

  Guidant Corporation     12/05/05      $ 25.4        40.8x        25.8x        25%(4)   

 

(1) Biomet is not a publicly traded company.
(2) Reflects May 30, 2014 offer by Valeant, which was rejected by the Allergan board of directors. Premium based on closing share price on the last trading day prior to public reports of possible bid on April 10, 2014. Transaction value does not include a Contingent Value Right relating to future sales of certain target products.
(3) Premium based on closing share price on the last trading day prior to public reports of possible bid on April 15, 2011.
(4) Premium based on closing share price on the last trading day prior to public reports of possible bid on December 1, 2004.

Other Healthcare

 

  Acquirer  

Target

  Announcement
Date
    Transaction
Value
(billions of USD)
    LTM P/E     LTM EV/
EBITDA
    30-day
Premium
 

Actavis plc

  Forest Laboratories Inc.     2/18/14      $ 21.9        78.5x        52.5x        30

Thermo Fisher Scientific Inc.

  Life Technologies Corporation     4/15/13      $ 15.7        18.7x        12.6x        49 %(1) 

Express Scripts Inc.

  Medco Health Solutions Inc.     7/21/11      $ 33.7        18.8x        11.1x        27

Sanofi-Aventis SA

  Genzyme Corporation     10/04/10      $ 20.8        64.6x        26.9x        37 %(2) 

Merck KGaA

  Millipore Corporation     2/28/10      $ 7.1        26.8x        17.4x        55

Merck & Co.

  Schering-Plough Corporation     3/9/09      $ 45.6        13.5x        11.7x        21

Pfizer Inc.

  Wyeth     1/26/09      $ 65.2        14.2x        8.2x        39

 

(1) Premium based on closing share price on the last trading day prior to public reports of possible bid on January 18, 2013.
(2) Premium based on closing share price on the last trading day prior to public reports of possible bid on July 23, 2010. Transaction value includes a Contingent Value Right valued at $2.23 per share as of 04/01/11, the first day of trading.

Perella Weinberg observed that the LTM P/E ratio and LTM EV/EBITDA multiple for the transaction were 24.7x and 16.9x, respectively. Perella Weinberg also observed that the implied premiums of the offer price in the transaction to Covidien’s 30-day volume-weighted average price and Covidien’s June 13, 2014 closing share price were 29% and 29%, respectively.

 

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No company or transaction utilized as a comparison in the selected precedent transactions analysis is identical to Covidien, nor are any such precedent transactions identical to the transaction. In evaluating the transactions listed above, Perella Weinberg made judgments and assumptions with respect to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Medtronic and Covidien, including, but not limited to, the impact of competition on the business of Medtronic, Covidien or the industry generally, industry growth, and the absence of any adverse material change in the financial condition and prospects of Medtronic, Covidien or the industry or in the financial markets in general, which could affect the public trading value of the companies and the aggregate value of the transactions to which they are being compared.

Precedent Premium Paid Analysis

Using publicly available data from Dealogic, Perella Weinberg reviewed the premiums paid in selected acquisitions of publicly-traded companies since January 1, 2010. From this pool, the following three types of acquisitions were selected and grouped together: (a) acquisitions with mixed cash and stock consideration, (b) acquisitions with all stock consideration, and (c) “merger of equals” transactions. Perella Weinberg also reviewed the premiums paid in selected Healthcare transactions as a subgroup. Healthcare transactions were selected by identifying transactions where the target was categorized in the healthcare general industry group as defined by Dealogic.

For each of the transactions, based on publicly available information, Perella Weinberg calculated the premiums of the offer price in the transaction to the target company’s closing stock price 30 days prior to the announcement of the transaction, and analyzed the first quartile high, median and third quartile low premiums each of the groups described above as well as for all the transactions as a group. The results of these analyses are summarized in the table below.

 

     Number
of deals
     Public Transactions Premiums Paid (%)  
        25th Percentile      Median      75th Percentile  

All deals

           

All industries

     2,041         52         31         16   

Healthcare

     227         58         38         23   

Mixed cash and stock

           

All industries

     238         45         31         19   

Healthcare

     27         42         31         20   

All stock

           

All industries

     354         47         23         5   

Healthcare

     14         43         30         15   

Merger of equals

           

All industries

     44         26         13         5   

Healthcare

     4         28         25         16   

Based on the precedent premium paid data, precedent transactions data, and experience and judgment of Perella Weinberg, and recognizing that no company or transaction is identical to Covidien or to the transaction, respectively, a representative range of premiums of 20% to 40% was selected and applied to the Covidien share price as of June 13, 2014. This analysis resulted in an implied value per ordinary share of Covidien ranging from approximately $86 to $101 per share.

 

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Discounted Cash Flow Analysis

Covidien

Perella Weinberg conducted a discounted cash flow analysis for Covidien based on the Public Forecasts and the Adjusted Covidien Forecasts by:

 

  calculating, in each case, the present value as of June 13, 2014 of the estimated standalone unlevered free cash flows (calculated as adjusted earnings before interest payments after taxes plus depreciation and amortization, minus capital expenditures, and adjusting for changes in net working capital and other cash flows) that Covidien could generate for the remainder of fiscal year 2014 through fiscal year 2024 using discount rates ranging from 8.0% to 9.0% based on estimates of the weighted average cost of capital of Covidien derived using the Capital Asset Pricing Model (“CAPM”), and

 

  adding, in each case, terminal values calculated using perpetuity growth rates ranging from 2.0% to 3.0% and discounted using rates ranging from 8.0% to 9.0%.

The range of perpetuity growth rates was estimated by Perella Weinberg utilizing its professional judgment and experiences, taking into account the Adjusted Covidien Forecasts and Public Forecasts and market expectations regarding long-term real growth of gross domestic product and inflation. Perella Weinberg also cross-checked such estimates of perpetuity growth rates against the EBITDA multiples implied by such growth rates and a range of discount rates to be applied to Covidien’s future unlevered cash flow forecasts.

Perella Weinberg used a range of discount rates from 8% to 9% derived by application of the Capital Asset Pricing Model, which takes into account certain company-specific metrics, including Covidien’s target capital structure, the cost of long-term debt, forecasted tax rate and historical beta, as well as certain financial metrics for the United States financial markets generally.

From the range of implied enterprise values, Perella Weinberg derived ranges of implied equity values for Covidien in each case both with and without the addition of cost synergies (discounted at 8.0% to 9.0% and using perpetuity growth rates ranging from 2.0% to 3.0% based upon Anticipated Synergies). To calculate the implied equity value from the implied enterprise value, Perella Weinberg subtracted debt, non-operating liabilities and minority interest and added cash and cash equivalents. Perella Weinberg calculated implied value per share by dividing the implied equity value by the fully diluted shares (using the treasury method). These analyses resulted in the following reference ranges of implied equity values per ordinary share of Covidien:

 

     Range of Implied Present Value
Per Share
   Range of Implied Present Value
Per Share (including synergies)

Public Forecasts

   $72 – $99    $90 – $124

Adj. Covidien Forecasts

   $80 – $110    $99 – $136

Medtronic

Perella Weinberg conducted a discounted cash flow analysis for Medtronic based on the Public Forecasts and the Medtronic Forecasts by:

 

  calculating, in each case, the present value as of June 13, 2014 of the estimated standalone unlevered free cash flows (calculated as adjusted earnings before interest payments after taxes plus depreciation and amortization, minus capital expenditures, and adjusting for changes in net working capital and other cash flows) that Medtronic could generate for the remainder of fiscal year 2015 through fiscal year 2024 using discount rates ranging from 8.0% to 9.0% based on estimates of the weighted average cost of capital of Medtronic derived using CAPM, and

 

  adding, in each case, terminal values calculated using perpetuity growth rates ranging from 2.0% to 3.0% and discounted using rates ranging from 8.0% to 9.0%.

 

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The range of perpetuity growth rates was estimated by Perella Weinberg utilizing its professional judgment and experiences, taking into account the Medtronic Forecasts and Public Forecasts and market expectations regarding long-term real growth of gross domestic product and inflation. Perella Weinberg also cross-checked such estimates of perpetuity growth rates against the EBITDA multiples implied by such growth rates and a range of discount rates to be applied to Medtronic’s future unlevered cash flow forecasts.

Perella Weinberg used a range of discount rates from 8% to 9% derived by application of the Capital Asset Pricing Model, which takes into account certain company-specific metrics, including Medtronic’s target capital structure, the cost of long-term debt, forecasted tax rate and historical beta, as well as certain financial metrics for the United States financial markets generally.

From the range of implied enterprise values, Perella Weinberg derived ranges of implied equity values for Medtronic. To calculate the implied equity value from the implied enterprise value, Perella Weinberg subtracted debt, non-operating liabilities and minority interest and added cash and cash equivalents. Perella Weinberg calculated implied value per share by dividing the implied equity value by the fully diluted shares (using the treasury method). These analyses resulted in the following reference ranges of implied equity value per share of Medtronic common stock:

 

     Range of Implied Present Value
Per Share
 

Public Forecasts

   $ 54 – $72   

Medtronic Forecasts

   $ 62 – $82   

Miscellaneous

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth herein, without considering the analyses or the summary as a whole could create an incomplete view of the processes underlying Perella Weinberg’s opinion. In arriving at its fairness determination, Perella Weinberg considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered. Rather, Perella Weinberg made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the analyses described herein as a comparison is directly comparable to Medtronic, Covidien or the transaction.

Perella Weinberg prepared the analyses described herein for purposes of providing its opinion to the Medtronic board of directors as to the fairness, from a financial point of view, as of the date of such opinion, of the merger consideration of one New Medtronic share to be received for each share of Medtronic common stock (taking into account the acquisition of Covidien) as provided for in the Transaction Agreement to the holders of Medtronic common stock (other than Medtronic and its subsidiaries). These analyses do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. Perella Weinberg’s analyses were based in part upon third party research analyst estimates, which are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by Perella Weinberg’s analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties to the Transaction Agreement or their respective advisors, none of Medtronic, Covidien, Perella Weinberg or any other person assumes responsibility if future results are materially different from those forecasted by third parties.

As described above, the opinion of Perella Weinberg to the Medtronic board of directors was one of many factors taken into consideration by the Medtronic board of directors in making its determination to approve the transaction. Perella Weinberg was not asked to, and did not, recommend the specific consideration to the Medtronic shareholders provided for in the Transaction Agreement, which consideration was determined through arm’s length negotiations between Medtronic and Covidien.

 

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Pursuant to the terms of the engagement letter between Perella Weinberg and Medtronic dated as of May 11, 2014, Medtronic became obligated to pay Perella Weinberg $7 million upon the delivery of Perella Weinberg’s opinion, and has agreed to pay Perella Weinberg an additional $29 million upon the closing of the transaction. In addition, Medtronic agreed to reimburse Perella Weinberg for its reasonable expenses, including attorneys’ fees and disbursements, and to indemnify Perella Weinberg and related persons against various liabilities, including certain liabilities under the federal securities laws.

In the ordinary course of its business activities, Perella Weinberg or its affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers or clients, in debt or equity or other securities (or related derivative securities) or financial instruments (including bank loans or other obligations) of Medtronic or Covidien or any of their respective affiliates. During the two-year period prior to the date of Perella Weinberg’s opinion, no material relationship existed between Perella Weinberg and Medtronic or Covidien or their respective affiliates pursuant to which compensation was received by Perella Weinberg; however, Perella Weinberg and its affiliates may in the future provide investment banking and other financial services to Medtronic and Covidien and their respective affiliates and in the future may receive compensation for the rendering of such services.

Opinion of Covidien’s Financial Advisor

Goldman Sachs delivered its opinion to Covidien’s board of directors that, as of June 15, 2014 and based upon and subject to the factors and assumptions set forth therein, the scheme consideration to be paid pursuant to the Transaction Agreement was fair from a financial point of view to the holders (other than Medtronic and its affiliates) of Covidien ordinary shares.

The full text of the written opinion of Goldman Sachs, dated June 15, 2014, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with its opinion, is attached as Annex F. Goldman Sachs provided its opinion for the information and assistance of Covidien’s board of directors in connection with its consideration of the transaction. The Goldman Sachs opinion does not constitute a recommendation as to how any holder of Covidien ordinary shares should vote with respect to the transaction or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

  the Transaction Agreement;

 

  the announcement of the transaction pursuant to Rule 2.5 of the Takeover Rules;

 

  the expenses reimbursement agreement;

 

  annual reports to shareholders and Annual Reports on Form 10-K of Covidien and Medtronic for the five fiscal years ended the last Friday in September 2013 and the last Friday in April 2013, respectively;

 

  certain interim reports to shareholders and Quarterly Reports on Form 10-Q of Covidien and Medtronic;

 

  certain other communications from Covidien and Medtronic to their respective shareholders;

 

  certain publicly available research analyst reports for Covidien and Medtronic;

 

  certain internal financial analyses and forecasts for Covidien prepared by its management and certain internal financial analyses and forecasts for Medtronic prepared by its management, in each case, as approved for Goldman Sachs’ use by Covidien (which we refer to in this section as the “Forecasts”); and

 

  certain operating synergies projected by the managements of Covidien and Medtronic to result from the transaction and approved for Goldman Sachs’ use by Covidien (which we refer to in this section as the “Synergies”).

 

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Goldman Sachs also held discussions with members of the senior management of Covidien regarding their assessment of the past and current business operations, financial condition and future prospects of Covidien and Medtronic and the strategic rationale for, and the potential benefits of, the transaction; reviewed the reported price and trading activity for the Covidien ordinary shares and Medtronic common shares; compared certain financial and stock market information for Covidien and Medtronic with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business transactions in the medical devices industry and in other industries; and performed such other studies and analyses, and considered such other factors, as Goldman Sachs deemed appropriate.

For purposes of rendering the opinion described above, Goldman Sachs, with Covidien’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, Goldman Sachs, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with Covidien’s consent that the Forecasts and the Synergies had been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Covidien. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of Covidien, Medtronic or New Medtronic or any of their respective subsidiaries and Goldman Sachs was not furnished with any such evaluation or appraisal. Goldman Sachs has assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the transaction will be obtained without any adverse effect on Covidien, Medtronic or New Medtronic or on the expected benefits of the transaction in any way meaningful to its analysis. Goldman Sachs has assumed that the transaction will be consummated on the terms set forth in the Transaction Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of Covidien to engage in the transaction, or the relative merits of the transaction as compared to any strategic alternatives that may be available to Covidien; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to the holders (other than Medtronic and its affiliates) of Covidien ordinary shares, as of the date of the opinion, of the scheme consideration to be paid pursuant to the Transaction Agreement. Goldman Sachs does not express any view on, and its opinion does not address, any other term or aspect of the Transaction Agreement or transaction or any term or aspect of any other agreement or instrument contemplated by the Transaction Agreement or entered into or amended in connection with the transaction, including the fairness of the transaction to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors or other constituencies of Covidien; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Covidien, or any class of such persons, in connection with the transaction, whether relative to the scheme consideration to be paid to the holders (other than Medtronic and its affiliates) pursuant to the Transaction Agreement or otherwise. Goldman Sachs does not express any opinion as to the prices at which the New Medtronic ordinary shares will trade at any time or as to the impact of the transaction on the solvency or viability of Covidien, Medtronic or New Medtronic or the ability of Covidien, Medtronic or New Medtronic to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses delivered by Goldman Sachs to Covidien’s board of directors in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent the relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of

 

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Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before June 13, 2014, the last trading day prior to the date on which Covidien’s board of directors approved the Transaction Agreement, and is not necessarily indicative of current market conditions.

Historical Stock Trading Analysis. Goldman Sachs analyzed the consideration to be paid to holders (other than Medtronic and its affiliates) of ordinary shares of Covidien pursuant to the Transaction Agreement, assuming a $93.22 value for such consideration (which we refer to in this section as the “Implied Transaction Consideration,” calculated as the cash consideration plus the implied stock consideration per ordinary share of Covidien based on the closing price of $60.70 per common share of Medtronic on June 13, 2014) in relation to the historical trading price of ordinary shares of Covidien. This analysis indicated that the Implied Transaction Consideration in the amount of $93.22 per ordinary share of Covidien represented:

 

  a premium of 29.4% to the closing price of an ordinary share of Covidien of $72.02 on June 13, 2014;

 

  a premium of 29.1% to the closing price of an ordinary share of Covidien of $72.18 on May 13, 2014;

 

  a premium of 41.6% to the closing price of an ordinary share of Covidien of $65.81 on December 13, 2013;

 

  a premium of 62.4% to the closing price of an ordinary share of Covidien of $57.41 on July 1, 2013, which is the first day after the completion of the 2013 separation of Mallinckrodt from Covidien;

 

  a premium of 26.6% to the highest closing price of an ordinary share of Covidien of $73.66 since July 1, 2013, which is the first day after the completion of the 2013 separation of Mallinckrodt from Covidien;

 

  a premium of 29.0% to the average closing price for the one-month period ended June 13, 2014 of an ordinary share of Covidien of $72.27;

 

  a premium of 32.7% to the average closing price for the six-month period ended June 13, 2014 of an ordinary share of Covidien of $70.25; and

 

  a premium of 40.0% to the average closing price for the period beginning on July 1, 2013 which is the first trading day after the completion of the 2013 separation of Mallinckrodt from Covidien, and ended June 13, 2014 of an ordinary share of Covidien of $66.58.

Goldman Sachs also compared the Implied Transaction Consideration to the Forecasts of Covidien’s EBITDA (as defined below) for the calendar years 2014 and 2015 and to the Forecasts of Covidien’s earnings per share for the calendar years 2014-2016. This analysis indicated that the Implied Transaction Consideration of Covidien represented:

 

  a multiple of 15.8x to the estimated calendar year 2014 EBITDA of Covidien of approximately $3.0 billion;

 

  a multiple of 14.4x to the estimated calendar year 2015 EBITDA of Covidien of approximately $3.2 billion;

 

  a multiple of 22.5x to the estimated calendar year 2014 earnings per share of Covidien of approximately $4.13;

 

  a multiple of 20.2x to the estimated calendar year 2015 earnings per share of Covidien of approximately $4.61; and

 

  a multiple of 18.1x to the estimated calendar year 2016 earnings per share of Covidien of approximately $5.16.

Selected Companies Analysis. Goldman Sachs reviewed and compared certain financial and stock market information and public market multiples for Covidien to corresponding financial and stock market information and public market multiples for the following publicly traded corporations in the medical device industry:

 

  Baxter International Inc.

 

  Becton, Dickinson and Company

 

  CareFusion Corp.

 

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  CR Bard, Inc.

 

  Johnson & Johnson

 

  Medtronic

 

  Abbott Laboratories

 

  Stryker Corp.

 

  St. Jude Medical, Inc.

 

  Boston Scientific Corp.

 

  Zimmer Holdings, Inc.

Although none of the selected companies is directly comparable to Covidien, the companies included were chosen because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain operations of Covidien.

The estimates for earnings per share and for earnings before interest, taxes, depreciation and amortization (“EBITDA”) contained in the analysis set forth below were based on Institutional Brokers’ Estimate System (“IBES”) consensus estimates as of June 13, 2014.

In its analysis, Goldman Sachs derived and compared for Covidien and the selected companies:

 

  enterprise value (which is defined as fully diluted equity value plus total debt, less total cash and cash equivalents), as of June 13, 2014, as a multiple of estimated EBITDA for calendar year 2014, which is referred to below as “2014E EV/EBITDA”;

 

  price per share, as of June 13, 2014, as a multiple of estimated earnings per share for calendar year 2014, which is referred to below as “2014E P/E”; and

 

  price per share, as of June 13, 2014, as a multiple of estimated earnings per share for calendar year 2015, which is referred to below as “2015E P/E.”

For purposes of these calculations, Goldman Sachs utilized an equity value for each company derived by multiplying the number of fully diluted outstanding shares (including convertible securities and options) by the company’s closing share price on June 13, 2014. Goldman Sachs then added the net debt to the equity value of such company derived from the foregoing calculations to determine an enterprise value for each company. The results of these analyses are summarized as follows:

 

     2014E
EV/EBITDA
   2014E P/E    2015E P/E

Baxter

   10.3x    14.2x    13.4x

Becton Dickinson

   10.9x    18.4x    16.9x

CR Bard

   12.0x    16.6x    15.1x

Johnson & Johnson

   11.5x    17.5x    16.2x

Medtronic

   9.8x    15.3x    14.3x

Abbott

   11.5x    18.0x    16.1x

Stryker

   11.6x    17.3x    15.8x

St. Jude Medical

   12.2x    16.4x    15.1x

Boston Scientific

   12.3x    16.0x    14.3x

Zimmer

   10.0x    17.3x    16.2x

CareFusion

   9.8x    17.1x    15.2x

Range of the Selected Companies
(excluding Covidien and Medtronic)

   9.8x – 12.3x    14.2x – 18.4x    13.4x – 16.9x

Median of the Selected Companies
(excluding Covidien and Medtronic)

   11.5x    17.2x    15.5x

 

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Premia Paid Analysis. Goldman Sachs reviewed and analyzed the acquisition premia for all transactions announced or completed from June 13, 2004 to June 13, 2014 involving publicly traded targets in which the consideration consisted of a mix of stock and cash and for which the enterprise value implied by the purchase price paid in the acquisition exceeded $20 billion (excluding transactions with undisclosed value, spin-offs, recapitalizations, self-tender offers, repurchases, exchange offers and transactions in which a company was acquiring the remaining minority stake in a target company which it did not already own), calculated relative to the target’s closing price one day prior to the announcement of the relevant transaction, the target’s closing price one month prior to the announcement of the relevant transaction and the target’s 52-week high price. The following table presents the results of this analysis:

 

Median Historical Merger Premia

 

Transaction-type

   1-Day
Premium
    1-Month
Premium
    52-Week High
Premium
 

All Industries

     26.2     29.4     10.3

Healthcare

     26.1     30.2     9.1

Transaction Agreement

     29.4     29.1     26.6

Goldman Sachs also reviewed and analyzed the acquisition premia for all transactions announced or completed since 2009 involving publicly traded targets in which the consideration consisted of a mix of stock and cash and for which the enterprise value implied by the purchase price paid in the acquisition exceeded $1 billion (excluding transactions with undisclosed value, spin-offs, recapitalizations, self-tender offers, repurchases, exchange offers and transactions in which a company was acquiring the remaining minority stake in a target company which it did not already own), calculated relative to the target’s closing price one day prior to the announcement of the relevant transaction. The following table presents the results of this analysis:

 

Average Acquisition Premia 1-Day Prior to Announcement of Transaction

 

2009

     45

2010

     43

2011

     35

2012

     34

2013

     23

2014 YTD

     28

Illustrative Present Value of Future Share Price Analyses. Goldman Sachs performed an illustrative analysis of the implied present value of the future share price (including projected future dividends) of Covidien, which is designed to provide an indication of the present value of a theoretical future value of Covidien’s equity as a function of Covidien’s estimated future earnings and its assumed price to future earnings per share multiple. Goldman Sachs also performed an illustrative analysis of the implied per share present value of the scheme consideration to be paid to holders of ordinary shares of Covidien pursuant to the Transaction Agreement (taking into account an analysis of the implied present value of the future share price of New Medtronic and the cash portion of such consideration). For these analyses, Goldman Sachs used the Forecasts for fiscal years 2015-2019.

For ordinary shares of Covidien, Goldman Sachs performed an analysis of the illustrative present value of the future share price (including projected future dividends) by first multiplying the Forecasts of cash EPS for fiscal years 2015-2019 by an illustrative range of next-twelve-months P/E multiples of 14.5x to 18.5x to determine the implied equity value of ordinary shares of Covidien. These implied per share future equity values for the fiscal years ending on the last Friday of September in 2015-2019 were then discounted to March 31, 2014 (dividends discounted using a mid-year convention) using a discount rate of 9.8%, reflecting an estimate of Covidien’s cost of equity. This analysis yielded an illustrative range of implied per share present values of ordinary shares of Covidien of $62.64 to $89.36 for fiscal years 2015-2019.

For shares of New Medtronic, Goldman Sachs performed an analysis of the illustrative implied present value of the future share price (including Medtronic dividends and value from Covidien shares based on an

 

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exchange ratio of 0.9560x) of New Medtronic for 2015-2019 by using the Forecasts, the Synergies and pro forma blended next-twelve-months P/E multiples of 13.5x to 16.5x (blended based on the weighted average net incomes of Medtronic and Covidien). The implied per share future equity values for the years ending April 30, 2015-2019 were discounted to March 31, 2014 (dividends discounted using a mid-year convention) using a discount rate of 9.4%, reflecting an estimate of New Medtronic’s market capitalization weighted average cost of equity. These present values were then multiplied by 0.9560 and increased by $35.19, reflecting the share portion and the cash portion, respectively, of the scheme consideration to be received by holders of ordinary shares of Covidien pursuant to the Transaction Agreement. This analysis yielded an illustrative range of implied per share present values of the scheme consideration to be paid to holders of ordinary shares of Covidien pursuant to the Transaction Agreement (taking into account the analysis of the implied present value of the future share price of New Medtronic described in this paragraph and the cash portion of such consideration) of $94.53 to $117.82 for fiscal years 2015-2019.

Illustrative Discounted Cash Flow Analysis. Goldman Sachs performed an illustrative discounted cash flow analysis on Covidien, using the Forecasts, to determine a range of illustrative present values per ordinary share of Covidien on a standalone basis. Using illustrative discount rates ranging from 8.0% to 9.0%, reflecting estimates of Covidien’s weighted average cost of capital, Goldman Sachs derived illustrative ranges of implied enterprise values for Covidien by discounting to present values as of March 31, 2014 (a) estimates of Covidien’s unlevered free cash flows for (a) the six-month period ending on the last Friday in September 2014, (b) the years 2015 through 2019 based on the Forecasts and (c) illustrative terminal values as of the last Friday in September 2019 based on perpetuity growth rates ranging from 1.0% to 2.0%. Goldman Sachs then derived the implied equity value per ordinary share of Covidien by deducting the value of Covidien’s net debt as of March 28, 2014, and dividing the result by the number of fully diluted outstanding ordinary shares of Covidien in accordance with information provided by Covidien’s management. The analysis resulted in a range of illustrative values of $71.85 to $94.02 per Covidien ordinary share.

Goldman Sachs also performed an illustrative discounted cash flow analysis on New Medtronic, using the Forecasts and the Synergies, to determine a range of illustrative present values per ordinary share of New Medtronic on a pro forma basis. Using illustrative discount rates ranging from 8.0% to 9.0%, reflecting estimates of New Medtronic’s weighted average cost of capital, Goldman Sachs derived illustrative ranges of implied enterprise values for New Medtronic by discounting to present values as of March 31, 2014 (a) estimates of the unlevered free cash flows of Covidien, Medtronic and the Synergies for (a) the years 2015 through 2019 based on the Forecasts and (b) illustrative terminal values as of April 30, 2019 based on perpetuity growth rates ranging from 1.0% to 2.0%. Goldman Sachs then derived the implied equity value per ordinary share of New Medtronic by deducting the value of Covidien’s net debt as of March 28, 2014 and Medtronic’s net debt as of April 30, 2014 (adjusted for the Transaction on a pro forma basis in accordance with information provided by Covidien management), and dividing the result by the number of fully diluted ordinary shares of New Medtronic in accordance with information provided by Covidien’s management. Goldman Sachs then derived the implied value of the per share scheme consideration to be paid to holders of ordinary shares of Covidien pursuant to the Transaction Agreement, calculated as the cash consideration of $35.19 plus 0.9560 of the implied equity value per share for New Medtronic. This analysis resulted in an illustrative range of present values of the per share scheme consideration to holders of ordinary shares of Covidien of $98.14 to $118.84.

The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experiences, taking into account the Forecasts and market expectations regarding long-term real growth of gross domestic product and inflation. Goldman Sachs also cross-checked such estimates of perpetuity growth rates against the EBITDA multiples that are implied by such growth rates and a range of discount rates to be applied to Covidien’s future unlevered cash flow forecasts

Goldman Sachs used a range of discount rates from 8% to 9% derived by application of the Capital Asset Pricing Model, which takes into account certain company-specific metrics, including the company’s target capital structure, the cost of long-term debt, after-tax yield on permanent excess cash, if any, forecast tax rate and historical beta, as well as certain financial metrics for the United States financial markets generally.

 

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Illustrative Potential Per Share Value of the Scheme Consideration. Goldman Sachs calculated an illustrative range of pro forma values of the per share scheme consideration to be paid to holders of ordinary shares of Covidien pursuant to the Transaction Agreement, using the Forecasts. Goldman Sachs calculated an illustrative range of the pro forma values of the share portion of the scheme consideration as of April 30, 2015 based on (i) pro forma New Medtronic cash earnings per share for 2016 of $4.99 and (ii) next twelve months cash price to earnings multiples of (a) Covidien of 15.3x, (b) Medtronic of 13.8x and (c) New Medtronic of 14.3x (blended based on the weighted average net incomes of Medtronic and Covidien). Goldman Sachs then multiplied the illustrative range of the pro forma values of the share portion of the scheme consideration by the exchange ratio of 0.9560x. Goldman Sachs then added the cash portion of the scheme consideration of $35.19 to the illustrative range of the pro forma values of the share portion of the scheme consideration to calculate an illustrative range of pro forma values of the per share scheme consideration. The illustrative range of pro forma values of the per share scheme consideration was then discounted to June 15, 2014 using a discount rate of 9.4%, reflecting an estimate of Covidien’s and Medtronic’s market capitalization weighted average cost of equity. This analysis resulted in an illustrative range of pro forma values of the per share scheme consideration of $93.31 to $99.92.

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Covidien or Medtronic or the transaction.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to Covidien’s board of directors as to the fairness from a financial point of view of the scheme consideration to be paid pursuant to the Transaction Agreement to the holders (other than Medtronic and its affiliates) of Covidien ordinary shares. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Covidien, Medtronic, New Medtronic or Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The scheme consideration was determined through arm’s length negotiations between Covidien and Medtronic and was approved by Covidien’s board of directors. Goldman Sachs provided advice to Covidien during these negotiations. Goldman Sachs did not, however, recommend to Covidien or to Covidien’s board of directors any specific exchange ratio or that any specific exchange ratio constituted the only appropriate exchange ratio for the transaction.

As described above, Goldman Sachs’ opinion to Covidien’s board of directors was one of many factors taken into consideration by Covidien’s board of directors in making its determination to approve the Transaction Agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex F.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities,

 

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currencies, credit default swaps and other financial instruments of Covidien, Medtronic and any of their respective affiliates and third parties, or any currency or commodity that may be involved in the transactions contemplated by the Transaction Agreement. Goldman Sachs acted as financial advisor to Covidien in connection with, and participated in certain of the negotiations leading to, the transaction. Goldman Sachs expects to receive a transaction fee for its services in connection with the transaction, all of which is contingent upon consummation of the transaction, and Covidien has agreed to reimburse Goldman Sachs’ expenses arising, and indemnify Goldman Sachs against certain liabilities that may arise, out of Goldman Sachs’ engagement. Goldman Sachs also has provided certain financial advisory and/or underwriting services to Covidien and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as joint bookrunner on an offering of the Company’s 3.5% Senior Notes due 2018 and 4.75% Senior Notes due 2023 (aggregate principal amount of $900 million) in April 2013 and as advisor to the Company on the 2013 separation of Mallinckrodt from Covidien. Goldman Sachs also has provided certain financial advisory and/or underwriting services to Medtronic and/or its affiliates from time to time for which our Investment Banking Division has received, and may receive, compensation, including having acted as joint bookrunner on an offering of Medtronic’s 1.375% Senior Notes due 2018, 2.750% Senior Notes due 2023 and 4.000% Senior Notes due 2043 (aggregate principal amount of $3 billion) in March 2013, and as joint bookrunner on an offering of Medtronic’s Floating Rate Senior Notes due 2017, 0.875% Senior Notes due 2017, 3.625% Senior Notes due 2024 and 4.625% Senior Notes due 2044 (aggregate principal amount of $2 billion) in February 2014. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to Covidien, Medtronic, New Medtronic and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation.

Covidien’s board of directors selected Goldman Sachs as its financial advisor because Goldman Sachs is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transaction. Pursuant to a letter agreement, dated June 5, 2014, Covidien engaged Goldman Sachs to act as financial advisor in connection with the transaction. Pursuant to the terms of this engagement letter, Covidien has agreed to pay Goldman Sachs a transaction fee based on the aggregate consideration paid in the transaction, which as of the date of this joint proxy statement/prospectus is estimated to be approximately $58 million, all of which is contingent upon consummation of the transaction. In addition, Covidien has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Medtronic Unaudited Prospective Financial Information

Medtronic does not make public long-term projections as to future revenues, earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, in connection with Medtronic’s and Covidien’s evaluation of the transaction, Medtronic made available certain unaudited prospective financial information relating to Medtronic on a stand-alone, pre-transaction basis to Medtronic’s financial advisor, Covidien and Covidien’s financial advisor. In addition, Medtronic made available to Medtronic’s financial advisor certain unaudited prospective financial information relating to Covidien as adjusted by Medtronic. The unaudited prospective financial information was not prepared with a view toward public disclosure and the inclusion of this information should not be regarded as an indication that any of Medtronic, Covidien or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.

The unaudited prospective financial information was, in general, prepared solely for internal use and is subjective in many respects and thus subject to interpretation. While presented with numeric specificity, the unaudited prospective financial information reflects numerous estimates and assumptions made by the management of Medtronic with respect to industry performance and competition, general business, economic, market and financial conditions and matters specific to Medtronic’s business (or, in the case of the adjusted prospective financial information relating to Covidien, Covidien’s business), all of which are difficult to predict and many of which are beyond Medtronic’s control. Many of these assumptions are subject to change and the

 

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unaudited prospective financial information does not reflect revised prospects for Medtronic’s business (or, in the case of the adjusted prospective financial information relating to Covidien, Covidien’s business), changes in general business or economic conditions or any other transaction or event that has occurred or that may occur and that was not anticipated at the time such financial information was prepared. As a result, there can be no assurance that the results reflected in the unaudited prospective financial information will be realized or that actual results will not materially vary from this unaudited prospective financial information. In addition, since the unaudited prospective financial information covers multiple years, such information by its nature becomes less predictive with each successive year. Therefore, the inclusion of the unaudited prospective financial information in this joint proxy statement/prospectus should not be relied on as necessarily predictive of actual future events nor construed as financial guidance. Medtronic shareholders and Covidien shareholders are urged to review the section included herein entitled “Risk Factors—Risks Relating to Medtronic’s Business” for a description of risk factors with respect to Medtronic’s business and see Covidien’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q for a description of risk factors relating to Covidien’s business. See “Cautionary Statement Regarding Forward-Looking Statements” and “Where You Can Find More Information.”

The unaudited prospective financial information was not prepared with a view toward complying with the published guidelines of the SEC regarding projections or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information but, in the view of Medtronic’s management, was prepared on a reasonable basis, reflects the best available estimates and judgments at the time of preparation, and presents, to the best of management’s knowledge and belief at the time of preparation, the expected course of action and the expected future financial performance of Covidien. Neither Medtronic’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the unaudited prospective financial information contained herein (including the unaudited prospective financial information presented below under the heading “Covidien Unaudited Prospective Financial Information”), nor have they expressed any opinion or any other form of assurance on such information or the achievability of the results reflected in such information, and assume no responsibility for, and disclaim any association with, the unaudited prospective financial information. Accordingly, neither Medtronic’s independent registered public accounting firm, nor any other independent accountants, provide any form of assurance with respect thereto for the purpose of this joint proxy statement/prospectus.

The report of the independent registered public accounting firm of Medtronic contained in this joint proxy statement/prospectus relates to the historical financial information of Medtronic. It does not extend to the unaudited prospective financial information included in this joint proxy statement/prospectus and should not be read to do so.

Readers of this joint proxy statement/prospectus are cautioned not to unduly rely on the unaudited prospective financial information. Some or all of the assumptions which have been made regarding, among other things, the timing of certain occurrences or impacts, may have changed since the date such information was prepared. Medtronic has not updated and does not intend to update or otherwise revise the unaudited prospective financial information to reflect circumstances existing after the date when such information was prepared or to reflect the occurrence of future events, except to the extent required by applicable law. Medtronic has made no representation to Covidien or any other person in the Transaction Agreement or otherwise concerning the unaudited prospective financial information.

The unaudited prospective financial information set forth below does not give effect to the transaction. Medtronic shareholders and Covidien shareholders are urged to review the section included herein entitled “Medtronic Management’s Discussion and Analysis of Financial Condition and Results of Operation” for a description of Medtronic’s reported results of operations, financial condition and capital resources during 2014.

 

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The following table presents a summary of certain unaudited prospective financial information relating to Medtronic that Medtronic made available to Medtronic’s financial advisor (and that Medtronic’s financial advisor used, with Medtronic’s approval, for purposes of its fairness opinion) and, with respect to Revenue, EBIT and EBITDA information for 2015 through 2018, to Covidien and its financial advisor:

 

     For the fiscal year ending the last Friday of April,  
In billions (except per share data)      2015E          2016E          2017E          2018E          2019E    

Revenue

   $ 18.1       $ 19.2       $ 20.4       $ 21.8       $ 23.3   

EBIT

   $ 5.5       $ 5.8       $ 6.3       $ 6.7       $ 7.2   

EBITDA

   $ 6.3       $ 6.7       $ 7.2       $ 7.7       $ 8.3   

Unlevered free cash flow

   $ 3.3       $ 3.5       $ 3.7       $ 4.0       $ 4.3   

The following table presents a summary of certain unaudited prospective financial information relating to Covidien as adjusted by Medtronic that Medtronic made available to Medtronic’s financial advisor, and that Medtronic’s financial advisor used, with Medtronic’s approval, for purposes of its fairness opinion:

 

     For the fiscal year ending the last Friday of September,  
In billions (except per share data)      2014E          2015E          2016E          2017E          2018E          2019E    

Revenue

   $ 10.7       $ 11.3       $ 11.8       $ 12.5       $ 13.2       $ 13.9   

EBIT

   $ 2.4       $ 2.7       $ 2.9       $ 3.2       $ 3.5       $ 3.7   

EBITDA

   $ 3.0       $ 3.3       $ 3.5       $ 3.8       $ 4.2       $ 4.4   

Unlevered free cash flow

   $ 1.7       $ 2.0       $ 2.1       $ 2.3       $ 2.6       $ 2.7   

For purposes of its analysis of Covidien, Medtronic utilized unaudited prospective estimates of revenue and EBIT as provided by Covidien in April 2014 for Covidien’s fiscal years 2014 through 2018 from the Covidien Strategic Plan (as defined below) as well as updated unaudited prospective estimates of revenue and EBIT for Covidien’s fiscal years 2014 and 2015 as provided by Covidien in early May 2015. Medtronic adjusted and extrapolated from these estimates to develop the adjusted unaudited prospective financial information for Covidien set forth in the immediately preceding table. These adjustments and extrapolations were based on discussions with Covidien regarding Covidien’s business, a review of the Covidien Strategic Plan, a review of Covidien’s updated unaudited estimates of revenue and EBIT for Covidien’s fiscal years 2014 and 2015 as provided by Covidien in early May 2015, Medtronic’s views on certain macro-economic and industry trends, a review of Covidien’s historical financial performance and a review of publicly available reports prepared by Wall Street analysts that cover Covidien. Medtronic derived adjusted unaudited prospective estimates of Covidien’s unlevered free cash flow based upon the unaudited prospective estimates of EBIT for Covidien, as adjusted and extrapolated by Medtronic as described in the prior sentence, certain information made available to Medtronic and its financial advisor by Covidien in early May 2014, the Covidien Strategic Plan, and certain publicly available historical information regarding the amounts of Covidien’s depreciation and amortization, working capital, capital expenditures and tax rates. See “Covidien Unaudited Prospective Financial Information.”

Covidien Unaudited Prospective Financial Information

Covidien does not make public long-term projections as to future revenues, earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, in connection with Covidien’s and Medtronic’s evaluation of the transaction, Covidien made available certain unaudited prospective financial information relating to Covidien on a stand-alone, pre-transaction basis to Covidien’s financial advisor, Medtronic and Medtronic’s financial advisor. The unaudited prospective financial information was not prepared with a view toward public disclosure and the inclusion of this information should not be regarded as an indication that any of Covidien, Medtronic or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.

The unaudited prospective financial information was, in general, prepared solely for internal use and is subjective in many respects and thus subject to interpretation. While presented with numeric specificity, the

 

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unaudited prospective financial information reflects numerous estimates and assumptions made by the management of Covidien with respect to industry performance and competition, general business, economic, market and financial conditions and matters specific to Covidien’s business, all of which are difficult to predict and many of which are beyond Covidien’s control. Many of these assumptions are subject to change and the unaudited prospective financial information does not reflect revised prospects for Covidien’s business, changes in general business or economic conditions or any other transaction or event that has occurred or that may occur and that was not anticipated at the time such financial information was prepared. As a result, there can be no assurance that the results reflected in the unaudited prospective financial information will be realized or that actual results will not materially vary from this unaudited prospective financial information. In addition, since the unaudited prospective financial information covers multiple years, such information by its nature becomes less predictive with each successive year. Therefore, the inclusion of the unaudited prospective financial information in this joint proxy statement/prospectus should not be relied on as necessarily predictive of actual future events nor construed as financial guidance. Covidien shareholders and Medtronic shareholders are urged to review Covidien’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q for a description of risk factors with respect to Covidien’s business. See “Cautionary Statement Regarding Forward-Looking Statements” and “Where You Can Find More Information.”

The unaudited prospective financial information was not prepared with a view toward complying with the published guidelines of the SEC regarding projections or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, but, in the view of Covidien’s management, was prepared on a reasonable basis, reflects the best available estimates and judgments at the time of preparation, and presents, to the best of management’s knowledge and belief at the time of preparation, the expected course of action and the expected future financial performance of Covidien. Neither Covidien’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the unaudited prospective financial information contained herein (including the unaudited prospective financial information presented below under the heading “Medtronic Unaudited Prospective Financial Information”), nor have they expressed any opinion or any other form of assurance on such information or the achievability of the results reflected in such information, and assume no responsibility for, and disclaim any association with, the unaudited prospective financial information. Accordingly, neither Covidien’s independent registered public accounting firm, nor any other independent accountants, provide any form of assurance with respect thereto for the purpose of this joint proxy statement/prospectus.

The report of the independent registered public accounting firm of Covidien contained in Covidien’s Current Report on Form 8-K filed with the SEC on July 11, 2014 relates to the historical financial information of Covidien. It does not extend to the unaudited prospective financial information included in this joint proxy statement/prospectus and should not be read to do so.

Readers of this joint proxy statement/prospectus are cautioned not to unduly rely on the unaudited prospective financial information. Some or all of the assumptions which have been made regarding, among other things, the timing of certain occurrences or impacts, may have changed since the date such information was prepared. Covidien has not updated and does not intend to update or otherwise revise the unaudited prospective financial information to reflect circumstances existing after the date when such information was prepared or to reflect the occurrence of future events, except to the extent required by applicable law. Covidien has made no representation to Medtronic or any other person in the Transaction Agreement or otherwise concerning the unaudited prospective financial information.

The unaudited prospective financial information set forth below does not give effect to the transaction. Covidien shareholders and Medtronic shareholders are urged to review Covidien’s most recent SEC filings for a description of Covidien’s reported results of operations, financial condition and capital resources during 2014.

 

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In April 2014, Covidien provided to Medtronic and Medtronic’s financial advisor, as well as to Covidien’s financial advisor, certain unaudited prospective financial information that Covidien had prepared in connection with its strategic planning process in July 2013 (the “Covidien Strategic Plan”), which is set forth in the table below.

 

     For the fiscal year ending the last Friday of September,  
In millions    2014E      2015E      2016E      2017E      2018E  

Revenue

   $ 10,791       $ 11,427       $ 12,184       $ 13,101       $ 14,162   

Operating income (EBIT)

   $ 2,432       $ 2,630       $ 2,903       $ 3,262       $ 3,693   

In early May 2014, Covidien provided to Medtronic and Medtronic’s financial advisor, as well as to Covidien’s financial advisor, the following updated unaudited prospective financial information for fiscal year 2014: revenue of $10,691 million and operating income (EBIT) of $2,367 million, and the following updated unaudited prospective financial information for fiscal year 2015: revenue of $11,298 million and operating income (EBIT) of $2,685 million.

Subsequently, in mid-May 2014, Covidien provided its financial advisor certain updated unaudited prospective financial information for Covidien summarized below, which Covidien’s financial advisor used, with Covidien’s approval, for purposes of its fairness opinion:

 

     For the fiscal year ending the last Friday of September,  
In millions (except per share data)    2014E     2015E      2016E      2017E      2018E      2019E  

Revenue

   $ 10,691      $ 11,269       $ 11,808       $ 12,365       $ 12,958       $ 13,593   

Operating income (EBIT)

   $ 2,367      $ 2,633       $ 2,907       $ 3,207       $ 3,529       $ 3,868   

EBITDA

   $ 2,906      $ 3,173       $ 3,447       $ 3,747       $ 4,069       $ 4,408   

Earnings per share

   $ 4.02      $ 4.48       $ 5.01       $ 5.59       $ 6.23       $ 6.86   

Unlevered free cash flow

   $ 688   $ 2,088       $ 2,351       $ 2,602       $ 2,865       $ 3,127   

 

* Second half FY2014E only.

Financing

Bridge Credit Agreement

On June 15, 2014, Medtronic entered into a 364-day senior unsecured bridge credit agreement among Medtronic, New Medtronic, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent. Under the Bridge Credit Agreement, Bank of America, N.A. has committed to provide Medtronic with unsecured financing in an aggregate principal amount of up to $2,800,000,000. The commitments are intended to be drawn to finance, in part, the cash component of the scheme consideration and certain transaction expenses to the extent Medtronic does not arrange for alternative financing prior to the consummation of the transaction. New Medtronic has guaranteed the obligations of Medtronic under the Bridge Credit Agreement. Medtronic is not currently planning to draw funds under the Bridge Credit Agreement. However, if Medtronic draws loans under the Bridge Credit Agreement, it intends to refinance any debt incurred thereunder.

Cash Bridge Credit Agreement

Medtronic expects that it, New Medtronic and IrSub will require an additional approximately $13.2 billion in order to finance the cash component of the scheme consideration and certain transaction expenses. Medtronic expects that it, or its affiliates, will have cash equivalents in such amount available to it by the time of the consummation of the transaction. In order to backstop the anticipated amount of cash on hand at the consummation of the transaction, on June 15, 2014, IrSub entered into a 60-day senior unsecured cash bridge credit agreement among IrSub, New Medtronic, the lenders from time to time party thereto and Bank of America as administrative agent. Under the Cash Bridge Credit Agreement, Bank of America, N.A. has committed to provide IrSub with unsecured financing in an aggregate principal amount of up to $13,500,000,000 for a 60-day

 

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period. New Medtronic has also guaranteed the obligations of IrSub under the Cash Bridge Credit Agreement and has agreed to cause each of Medtronic and Covidien to provide additional guarantees of such obligations following the consummation of the transaction. IrSub is not currently planning to draw funds under the Cash Bridge Credit Agreement. Instead, IrSub expects to obtain intercompany loans on arm’s length terms from certain Medtronic affiliates using proceeds from the liquidation of cash equivalents by such Medtronic affiliates. If IrSub draws loans under the Cash Bridge Credit Agreement, such loans would be expected to be repaid from the proceeds of intercompany loans on arm’s length terms from certain Medtronic affiliates using proceeds from the liquidation of cash equivalents by such Medtronic affiliates.

General

The funding of the loans under each Credit Agreement (the “Closing Date”) is conditioned on, among other things, the consummation of the transaction and the absence of certain events of defaults described in each Credit Agreement. The commitments under each Credit Agreement automatically terminate on the earliest of (a) the funding and disbursement of the loans to the borrower on the Closing Date, (b) the occurrence of certain mandatory cancellation events or (c) March 15, 2015 (or if all but certain conditions under the Transaction Agreement have been completed, one year after June 15, 2015).

Loans outstanding under each Credit Agreement will bear interest, at the borrower’s option, either (a) at the base rate (defined as the highest of (1) the prime rate of Bank of America, N.A., (2) the federal funds rate plus 0.50% and (3) the applicable interest rate for a eurodollar loan with a one month interest period beginning on such day plus 1.00%) or (b) at the eurodollar rate, plus, in each case, an applicable margin which shall range depending on the debt rating of the borrower and, in the case of the Bridge Credit Agreement, the number of days which the loans remain outstanding from the Closing Date. In addition, the borrower under each Credit Agreement has agreed to pay (x) nonrefundable ticking interest of 0.05% on the amount of the aggregate commitments in effect from June 15, 2014 through the termination of the commitments, and (y) in the case of the Bridge Credit Agreement, a non-refundable duration fee of 0.50%, 0.75% and 1.00% on the 90th, 180th and 270th days, respectively, after the Closing Date on the aggregate principal amount of the loans outstanding on such day.

The borrower may voluntarily prepay the loans under each Credit Agreement at any time without premium or penalty. Each Credit Agreement also requires mandatory prepayments with the net cash proceeds of certain asset sales or debt or equity issuances subject to customary exceptions. Each Credit Agreement also contains customary events of default, upon the occurrence of which, and so long as such event of default is continuing, the amounts outstanding will accrue interest at an increased rate and payments of such outstanding amounts could be accelerated by the lenders. In addition, the loan parties under each Credit Agreement will be subject to certain affirmative and negative covenants.

Perella Weinberg, financial advisor to Medtronic, is satisfied that sufficient resources are available to satisfy in full the cash consideration payable to Covidien shareholders under the terms of the acquisition.

Transaction-Related Costs

Medtronic currently estimates that, upon the consummation of the transaction, transaction-related costs incurred by the combined company, including fees and expenses relating to financing, will be approximately $[—]  million.

Interests of Certain Persons in the Transaction

Medtronic

In considering the recommendation of the Medtronic board of directors, Medtronic shareholders should be aware that directors and executive officers of Medtronic have interests in the proposed transaction that are in addition to, or different from, any interests they might have as shareholders. These interests are described in more

 

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detail below, and, with respect to named executive officers of Medtronic, are quantified in the table below. The Medtronic board of directors was aware of these interests and considered them when it approved the Transaction Agreement and the transaction. Other than the interests described below, the proposed transaction is not expected to have an impact on the compensation and benefits payable to Medtronic’s directors or named executive officers.

Excise Tax Gross-Up

With respect to the merger, Section 4985 of the Code imposes an excise tax (15% in 2014) on the value of certain stock compensation held at any time during the six months before and six months after the closing of the transaction by individuals who were and/or are directors and executive officers of Medtronic and are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), during the same period. This excise tax applies to all payments (or rights to payment) granted to such persons by Medtronic in connection with the performance of services to Medtronic if the value of such payment or right is based on (or determined by reference to) the value or change in value of stock in Medtronic or its affiliates (excluding certain statutory incentive stock options and holding in tax qualified plans), which would include any outstanding (1) unexercised vested or unvested nonqualified stock options, (2) unvested restricted stock awards and (3) other stock-based compensation, referred to as the relevant equity awards, held by such Medtronic directors and executive officers during this 12-month period. The excise tax becomes effective contemporaneously with the closing of the transaction. However, the excise tax will not apply to (1) any stock option that is exercised on the expatriation date (i.e., the closing date of the transaction) or during the six-month period before such date and to the stock acquired in such exercise, if income is recognized under Section 83 of the Code on or before the expatriation date with respect to the stock acquired pursuant to such exercise, and (2) any other specified stock compensation that is exercised, sold, exchanged, distributed, cashed-out, or otherwise paid during such period in a transaction in which income, gain, or loss is recognized in full.

The Medtronic board of directors has determined that it is appropriate to provide Medtronic’s directors and executive officers with a gross-up payment with respect to the excise tax, so that, on a net after-tax basis, they will be in the same position as if no such excise tax had been applied. It is expected that either Medtronic or New Medtronic will pay this gross up payment. These gross-up payments will be non-deductible and will themselves be subject to the Section 4985 excise tax (15% in 2014). These amounts would be paid following the closing of the transaction, which is subject to, among other things, adoption of the plan of merger contained in the Transaction Agreement by Medtronic’s shareholders. The actual amounts due will be determinable following the consummation of the proposed transaction. Payment of the excise tax plus tax reimbursement will result in no unique benefit to these individuals but is intended only to place them in the same position as other equity compensation holders after the transaction. These gross-up payments will not cover any capital gains tax imposed on any exchange of shares of Medtronic common stock held by Medtronic’s directors or executive officers, and such directors and executive officers will be responsible for such capital gains tax just like all other Medtronic shareholders.

Quantification of Payments and Benefits to Medtronic’s Named Executive Officers

The following table and the related footnotes present information about the compensation payable to Medtronic’s named executive officers in connection with the transaction. The compensation shown in this table is subject to a vote, on a non-binding, advisory basis, of the stockholders of Medtronic at the special meeting, as described herein in “Medtronic Shareholder Vote on Specified Compensation Arrangements.

 

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