Medtronic 2016 Annual Report Download - page 10

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therapies, expanding their indications and applications for use, and developing new therapies and procedures. We continue to focus
on optimizing innovation, improving our R&D productivity, driving growth in emerging markets, clinical evidence generation,
and assessing our R&D programs based on their ability to deliver economic value to our customers.
Acquisitions and Investments
Our strategy to provide a broad range of therapies to restore patients' health and extend 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 an all-encompassing portfolio of
technological solutions. In addition to internally generated growth through our R&D efforts, historically we have relied, and expect
to continue to rely, upon acquisitions, investments, and alliances to provide access to new technologies both in areas served by
our existing businesses as well as in new areas and markets.
We expect to make future investments or acquisitions where we believe that we can stimulate the development of, or acquire new
technologies and products to further our strategic objectives, and strengthen our existing businesses. Mergers and acquisitions of
medical technology companies are inherently risky and no assurance can be given that any of our previous or future acquisitions
will be successful or will not materially adversely affect our consolidated results of operations, financial condition, and/or cash
flows.
For additional information, see Note 2 to the consolidated financial statements in “Item 8. Financial Statements and Supplementary
Data” in this Annual Report on Form 10-K and "Item 1A. Risk Factors - Failure to integrate acquired businesses into our operations
successfully could adversely affect our business."
Acquisition of Covidien plc in Fiscal Year 2015
On January 26, 2015, pursuant to a transaction agreement, dated as of June 15, 2014 (the Transaction Agreement), Medtronic, Inc.
and Covidien became subsidiaries of the Company. The total cash and stock value of the Covidien acquisition was $50.0 billion.
The operating results for Covidien are included in the Minimally Invasive Therapies Group, Cardiac and Vascular Group and
Restorative Therapies Group segments.
Based upon the acquisition valuation, the Company acquired $18.3 billion of customer-related intangible assets, $7.1 billion of
technology-based intangible assets, $430 million of tradenames, with weighted average estimated useful lives of 18, 16, and 6
years, respectively, $420 million of in-process research and development (IPR&D), and $30.0 billion of goodwill.
Fiscal Year 2016 Acquisitions
Twelve, Inc.
On October 2, 2015, the Company's Coronary & Structural Heart division acquired Twelve, Inc. (Twelve), a privately-held medical
device company focused on the development of a transcatheter mitral valve replacement device. Total consideration for the
transaction was approximately $472 million, which included an upfront payment of $428 million and the estimated fair value of
product development-based contingent consideration of $44 million. Based upon the acquisition valuation, the Company acquired
$192 million of IPR&D and $291 million of goodwill.
RF Surgical Systems, Inc.
On August 11, 2015, the Company's Surgical Solutions division acquired RF Surgical Systems, Inc. (RF Surgical), a medical
device company focused on the detection and prevention of retained surgical sponges. Total consideration for the transaction was
approximately $240 million. Based upon the acquisition valuation, the Company acquired $68 million of technology-based
intangible assets, $47 million of customer-related intangible assets, with estimated useful lives of 18 and 16 years, respectively,
and $135 million of goodwill.
Medina Medical
On August 31, 2015, the Company's Neurovascular division acquired Medina Medical (Medina), a privately-held medical device
company focused on commercializing treatments for vascular abnormalities of the brain, including cerebral aneurysms. Total
consideration for the transaction was approximately $219 million, which includes an upfront payment of $155 million and the
estimated fair value of revenue-based and product development-based contingent consideration of $64 million. Medtronic had
previously invested in Medina and held an 11 percent ownership position. Net of this ownership position, the transaction value
was approximately $195 million. Based upon the acquisition valuation, the Company acquired $122 million of IPR&D and $126
million of goodwill.