Minnesota Supreme Court allows shareholder suit over Medtronic-Covidien merger

Updated to clarify that MDT officers and directors were compensated for excise-tax based liabilities related to stock options, and not for capital gains. Medtronic (NYSE:MDT)  shareholders seeking to sue the company claiming they were harmed by its $50 billion corporate inversion merger with Covidien will get their chance in court, the Minnesota Supreme Court ruled yesterday. The case had been previously dismissed by lower courts which ruled that shareholders did not have the ability to sue under Minnesota law. Shareholders appealed, and the Minnesota Court of Appeals ruled that shareholders were directly damaged and could proceed last January. Yesterday, in a unanimous opinion, Minnesota Supreme Court Chief Justice Lorie Gildea upheld the appeals court’s decision that shareholders faced direct injury and that key portions of the case should proceed. Plaintiffs in the case argue that the inversion-structured merger burdened shareholders with millions in capital-gains taxes, as the US Internal Revenue Service treats such transactions as taxable events, and shareholders received no compensation for said costs. Medtronic officers and directors who incurred an excise-tax liability on their stock-based compensation, however, were reimbursed by the company for those charges, plaintiffs in the case argued. Shareholders also argued that their shares, and associated voting rights, were diluted as Medtronic lowered its corporate tax rate and increased the number of shares by issuing...
Source: Mass Device - Category: Medical Devices Authors: Tags: Business/Financial News Legal News Mergers & Acquisitions Medtronic Source Type: news