Medtronic

(MDT) - Get Report

set forth plans Tuesday to sell $4 billion in debt and use the proceeds to fund a $2.5 billion share buyback.

The Minneapolis-based medical device maker said it will sell $4 billion in senior convertible notes to institutional investors through a private placement, with an additional $400 million available to cover overallotments.

At the time of the note sale, the company plans to buy back a portion of the stock through block trades with certain of the note purchasers. The remainder of the shares will be bought back through an accelerated repurchase plan.

Besides the buyback, Medtronic said it plans to use a portion of the note proceeds to fund hedge transactions with the note purchasers in order to offset potential share dilution upon the future conversion of the notes.

Medtronic has about 1.2 billion shares outstanding. The company has 36 million shares available for repurchase under its current buyback program, but said the new plan will exceed that amount.

Shares rose 58 cents, or 1.2%, to $51.08 in after-hours trading.