Medtronic's investors are angry. And it looks like this time, they aren't going away without a fight.
While the Minnesota-based medical device firm keeps plugging away at its proposed deal to buy Ireland-based Covidien and reap the benefits of its new home's tax code, its shareholders continue to be a thorn in its side, suing the company and its executives for all the ways they've been wronged.
The latest example comes from a judge's ruling earlier this month allowing a group of Medtronic shareholders to sue the company over how it allegedly misled the public and shareholders over its Infuse product, which it says can help repair bones in spinal fusion procedures.
The product sounded promising. But underneath the surface lay one big side effect that the shareholders say was never talked about: infertility. Though the shareholders say Medtronic knew the Infuse could leave men sterile, they say the company continually tried to cover it up.
Patients soon suffered and sued. The product also made Medtronic's stock price skyrocket before plummeting, leaving shareholders to bear the brunt of the company's questionable deeds.
But that's not all. Another investor, Marilyn Clark, filed her own lawsuit against the company a few weeks ago, this one taking on a piece of the company's proposed tax deal that would save it a whole bunch of money by running away to the tax-friendly lands of Ireland.
The suit, filed October 3, says that as Medtronic flees to Ireland, the company is using the opportunity to save its officers and board of directors a bit of money on taxes -- $68 million, to be exact.
The whole scheme is happening because of an "excise tax" -- basically, a tax the U.S. government forces company officials to pay when their businesses try to leave the country. But instead of just sucking up and paying the millions in taxes, Medtronic's executives and board are trying to hand over the tab to the company. Medtronic claims it's all being done for the "welfare of the company," but it certainly sounds like it's mostly just helping execs.
Clark calls the whole thing "wholly self-serving, counter to public policy, and harmful to Medtronic shareholders."
While the cases are about different issues, they paint a picture of a company that's more concerned with profits than how it appears to the public. But with all the money Medtronic could save with its latest tax move, it may be able to smooth over all that unrest with the allure of more cash.