NEW YORK (The Deal) -- Acquisitive Minneapolis medical device specialist Medtronic (MDT - Get Report) on Sunday agreed to buy Irish rival Covidien (COV) for $42.9 billion to expand its portfolio and geographic footprint while gaining tax advantages.

Medtronic said it would pay $35.19 cash plus 0.956 shares in the expanded group for each Covidien share, the equivalent of $93.22 using Medtronic's Friday close, a 29% premium to Covidien's Friday closing price on the New York Stock Exchange.

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As part of the agreed acquisition, Medtronic would become a plc with a legal base in Dublin and an operational headquarters in Minneapolis.

The move would allow the buyer to avoid repatriating nearly $14 billion in cash and thus reduce its U.S. tax bill.

More on Medtronic and Covidien:

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In what appears to be an acknowledgement of how the move could backfire amid consumers and politicians, Medtronic pledged to sink an extra $10 billion into R&D and investment in the U.S. over the next decade as part of the acquisition.

"Medtronic has consistently been the leading innovator and investor in U.S. medical technology, and this combination will allow us to accelerate those investments. These investments ultimately produce new therapy and treatment options that improve or save lives for millions of people around the world," said Medtronic Chairman and CEO Omar Ishrak.

Medtronic said the acquisition would allow it to save the combined company as much as $850 million a year by 2018 by eliminating redundant activities. The deal, set to close in either the final quarter of 2014 or the first of 2015, should add to earnings in 2016, the first full fiscal year.

Covidien may have made itself a target to rivals after by spinning off its drugs business a year ago into Mallinckrodt plc, which itself has become a buyer of other drugs and chemicals companies.

Medtronic has been fishing abroad for some time and was seen as a potential bidder for perennial U.K takeover candidate, orthopedic company Smith & Nephew (SNN). The Covidien deal ended that speculation, pushing S&N shares down 2.5%, or 27 pence, to 1,044 pence ($17.72) in Monday morning London trading.

The buyer is a regular on the dealmaking front. In January it bought Tyrx Inc., a Monmouth Junciton, N.J. maker of antibiotic-coated meshes for use in transplants, for $160 million plus milestones. It also bought Cardiocom LLC, of Chanhassen, Minn., for $200 million in August to expand its electronic patient monitoring business.

In a statement Covidien Chairman, President and CEO Jose E. Almeida said the deal "provides our shareholders with immediate value and the opportunity to participate in the significant upside potential of the combined organization."

Bank of America Merrill Lynch is providing financing to Medtronic for the acquisition.

Medtronic turned to Perella Weinberg Partners LP's Philippe McAuliffe, Peter Weinberg, Riccardo Benedetti and Chris O'Connor for financial advice. A Cleary Gottlieb Steen & Hamilton LLP team including Victor Lewkow, Matthew Salerno, Yaron Reich, Jason Factor, Laurent Alpert, Meme Peponis, Arthur Kohn, George Cary, Enrique Gonzalez-Diaz and Caroline Hayday and A & L Goodbody's Cian McCourt provided counsel.

Covidien's financial adviser is Goldman, Sachs & Co.'s Jason Silvers and its legal advisers are a Wachtell, Lipton, Rosen & Katz team includin gAdam Emmerich, Ben Roth and Victor Goldfeld and Arthur Cox's Brian O'Gorman.

David Marcus contributed to this report.