Medtronic Inc, a U.S. medical device maker said that it had agreed to acquire Covidien Plc for $42.9 billion in stock and cash. Medtronic is also going to move its executive base from Minneapolis to Ireland, where the tax rate is significantly lower.

Medtronic said that rather than tax considerations, the deal was driven by a complementary strategy with Covidien on medical technology. This deal will allow Minneapolis-based Medtronic to reduce its overall global tax burden.

Omar Ishrak, Chief Executive Officer of Medtronic said that the real purpose of acquisition is strategic, both in the long term and the intermediate term. He added that it is good for the United States in that they will make more investment in American technologies which previously they could not.

Ishrak said that Medtronic’s corporate tax rate, currently is about 18 percent it won’t change much with its relocation.

The two companies together will become one of the largest providers of medical devices in the industry. Shareholders of Covidien will own around 30 percent of the combined company. The merger of Covidien, a maker of devices used in a range of surgical procedures, and Medtronic will create a close competitor in size to the medical device business of industry leader Johnson & Johnson Co.

The deal will broaden Medtronic’s scope beyond its array of insulin pumps, heart devices, spinal implants and other products into areas such as laparoscopic procedures and weight-loss surgery. This expansion should allow Medtronic to compete for business from hospitals, especially in the United States where decreasing government reimbursement for medical procedures and healthcare reform efforts has kept pressure on device pricing.

This deal values each Covidien share at $93.22, paid for by $35.19 in cash and 0.956 Medtronic shares. Medtronic said the transaction represents a 29 percent premium to Covidien’s closing stock price on Friday.

Medtronic was advised by Cleary Gottlieb Steen & Hamilton LLP, A & L Goodbody and Perella Weinberg Partners LP, while Covidien was advised by Wachtell, Rosen & Katz, Goldman Sachs & Co, Arthur Cox and Lipton.