Medtronic, the global medical technology giant born in a northeast Minneapolis garage, has officially become an Irish corporation. And it’s nearly doubled its size in the process.

On Monday, Medtronic completed its long-planned acquisition of Dublin-based surgical supplier Covidien in a $49.9 billion transaction that is among the largest in Minnesota history. The deal puts both companies under a corporate parent based in Ireland, where companies face taxes of about one-third the U.S. rate. Medtronic’s executive offices remain in Minnesota.

With the deal in the books, attention now turns to what will be a challenging three-year process of integrating Covidien’s $10 billion in surgical supplies with Medtronic’s $17 billion of high-tech medical devices. Executives will be rolling out an integration plan developed in conference rooms around the world and behind secure doors in a wing of Medtronic’s Fridley headquarters.

Omar Ishrak, the Medtronic CEO who will remain top executive at the combined company, acknowledged the risk of failure. But the deal’s success will hinge on factors within the company’s control.

“Although big, the risk is contained and manageable,” Ishrak said in an interview. “It’s still big and it involves a lot of people, and you cannot take execution that lightly. So we’ll be all over it and focused. But we are confident that we will make this into a real success.”

Experts say success is not assured.

Many mergers fail to meet their objectives. And the acquisition of Covidien is more complicated than most because it involves personnel in more than 160 countries and a technical product line with sophisticated customers and regulators.

“This is cross-national. This is not cookie-cutter at all,” University of Minnesota business Prof. Alfred Marcus said. “I think it’s going to be a very formidable challenge.”

And the pressure to succeed is high. Both companies are entering the deal with strong financial performance, and missteps could easily roll back progress. Medtronic’s stock price has nearly doubled in three years. Covidien’s stock doubled and then kept going in that time.

Bringing the companies together without damaging that success was bulleted as the No. 1 goal for the companies’ integration team of 100 or so people.

The result is that Medtronic is not eyeing its sales forces or research-and-development staff for cuts, even though they’re expensive to maintain, because those areas drive growth.

“We think we can pull this off without destroying value,” Medtronic Chief Integration Officer Geoff Martha said. “Because no matter what people say, our view is, if we take a bunch of steps back in order to take steps forward, it’s hard to recover.”

But Medtronic will have to do some cost-cutting to justify the 29 percent premium it agreed to pay for Covidien’s outstanding shares. Executives have publicized a goal of cutting the combined company’s total expenditures by $850 million a year, within three years of closing the deal.

Costs will be cut by reducing redundant jobs in places like accounting and finance, particularly in Covidien’s U.S. operational headquarters in Mansfield, Mass. The companies also have duplicative real estate in expensive cities like Beijing and Delhi that will be reduced, as well as duplicate staff in those countries.

Medtronic also plans to bring Covidien onto its enterprisewide computer system — a detail that might sound like minutiae to anyone who hasn’t tried to merge complex company operations onto a single digital platform. Medtronic already paid dearly to get its operations onto an enterprisewide system; Covidien has not done so.

“That is a huge one,” Martha said. “It took us a billion dollars to get there, and some lessons learned, but we got there.

Experience will be key to success. Scholarly studies have shown that mergers executed by people with experience doing them are more successful in the long run, Marcus said.

Martha and Ishrak both came to Medtronic from General Electric, a company that has been built through acquisitions.

Marcus called their shared GE tenures “very significant,” though he remains skeptical of the Medtronic-Covidien tie-up.

“I’m a skeptic of most deals,” he said. “The burden of proof is on those who do it to show it works because the evidence in scholarly and semi-scholarly literature suggests the failure rate is as high as two-thirds for corporate acquisitions.”

Ishrak said past experience is relevant in terms of fundamentals, like keeping strong priorities and having a clear process to structure decisions throughout the process. But it’s not clear that any experience could prepare someone for the job of bringing Covidien and Medtronic together.

“I think this deal so big and so different that no one has done one like this before,” Ishrak said.


Twitter: @_JoeCarlson