Medtronics completed its merger with Covidien on 1/23/2015 for cash and Medtronics stock.
The information in our FAQ is based on information proided on the Medtronics investor relations web site.
This merger is a cash plus stock reorganization, which are becoming more and more frequent in recent years. For tax purposes this particular merger is treated as a sale of either Covidien or Medtronics and the proceeds used to purchase Medtronics, plc. All the information below is from the FAQ available on the Medtronics web site.
If your club held shares of Medtronics, skip down to the Medtronics Shareholders heading below.
If your club held Covidien, the steps can change a bit depending on if you have the online accounting at the myiclub.com web site, or the desktop Club Accounting 3.
Medtronics shareholders
1. Sell Transaction
The total merger consideration is $76.95 per Medtronics share. This is 1 share of Medtronics, plc for each Medtronics shares Calculate the total value received for your Medtronics shares by multiplying 76.95 by the total shares of Medtronics owned.
Total Proceeds = [76.95 x (# of Medtronics shares owned)] – (Reorganization fee).
For example, for 100 shares the sale proceeds would be (76.95 x 100) – (Reorganization fee).
Use the Suspense account to receive the sale proceeds.
Date this transaction 1/23/2015
2. Buy Transaction
The exchange ratio for Medtronics shareholders was 1: for this merger.
Enter a buy transaction for the same number of Medtronics shares as previously owned before this merger. The company being purchased will be Medtronics, plc.
Date the transaction 1/23/2015.
Choose the Suspense account to pay for the purchase.
The total purchase price will be = [76.95 x (# of Medtronics shares owned)].
Save the buy transaction and the entries needed to complete this merger are done.
3. Transfer Cash Received
If you were charged a reorganization fee, your Suspense account will have a negative balance after the purchase. Enter a Cash Transfer from the Broker account to the Suspense account to balance the cash accounts.
The rest of the steps on this page only apply if your club held Covidien shares prior to the merger; if that is not the case, then you do not need to take any more steps.
Covidien Shareholders whose club uses the online accounting at myiclub.com
The rest of the steps on this page only apply if your club uses the desktop Club Accounting 3. If that is not the case, then you do not need to take any more steps.
Covidien Shareholders whose club uses the desktop Club Accounting 3.
1. Sell Transaction
The total merger consideration is $108.7542 per Covidien share. This is $35.19 in cash and $ 73.5642 in Medtronics shares (76.95 x .956). Calculate the total value received for your Covidien shares by multiplying 108.7542 by the total shares of Covidien owned.
Total Proceeds = [108.7542 x (# of Covidien shares owned)] – (Reorganization fee).
Use the Suspense account to receive the sale proceeds.
Date this transaction 1/23/2015
2. Transfer Cash Received
Transfer from the Suspense account to the Broker account (or bank if appropriate), all cash received from this transaction. This will be the sum of the $35.19 per Covidien share plus any cash-in-lieu received for fractional shares of Medtronics. If your Suspense account balance was zero when you entered the sell transaction above, then the balance after transferring the cash received will be the total purchase price of the Medtronics shares you received in this merger.
3. Buy Transaction
Enter a buy transaction for the WHOLE number of shares received in this merger.
Date the transaction 1/24/2015. The total purchase price will be the amount remaining in the Suspense account, if the Suspense balance was zero when this process was started. The amount should be (108.7542 x # of Covidien shares owned) – (all cash received from this transaction, including cash-in-lieu of fractional shares) – (any reorganization fee charged by your broker).
Save the buy transaction and the entries needed to complete this merger are done.
