US multinational Medtronic agreed this weekend to buy Covidien, another large medical device multinational for $42.9 billion in cash and stock. This deal will combine two of the largest medical device manufacturers in the world.

The deal reported in the New York Times will also mean Medtronic relocates its global headquarters to Ireland where Covidien’s global HQ is based. These deals are commonly called inversions where a merger allows both companies to achieve savings on their annual corporate tax bills, which has become a hot topic internationally with a lot of focus on Irish government policy in the US and EU.

Medtronic employs over 2,000 people in Ireland mostly at it’s base in the medical device capital of Ireland, Galway.

Medtronic argues that this deal is for strategic purposes and its tax rate will remain at about 18 percent. However this deal will add to the growing controversy surrounding inversions and put pressure on the US government to change its tax policies to prevent companies relocating to places like Ireland and the Netherlands in search of a lower effective corporate tax rate.

This deal means the joint companies will become one of the biggest providers of medical devices in the world. Together they will have 87,000 employees and bases in 150 countries. According to Standard & Poor’s Capital IQ this is the largest foreign acquisition by an American company. Covidien shareholders will own about 30 percent of the combined company.

Medtronic, in a conscious effort to allay fears of a job exodus has commited to invest $10 billion in the US over the next ten years in technology research and acquisitions.

This deal will allow Medtronic which specializes in heart pacemakers and spinal treatments, among others to diversify its product range and reach. Covidien manufactures surgical equipment like ventilators, sutures and needles.

Medtronic CEO and Chairman Omar Ishrak (Ishrak will become CEO of the new company) commenting on the deal“We have complementary strengths, but a common vision,” Mr. Ishrak said. “We felt that together, we could accelerate our joint vision.”

According to the Irish Times, financing for the deal is being provided by Bank of America Merrill Lynch.

Medtronic is being advised by Perella Weinberg Partners and the law firms Cleary Gottlieb Steen & Hamilton and Irish law firm A & L Goodbody.

Covidien is being advised by Goldman Sachs and the law firms Wachtell, Lipton, Rosen & Katz and Irish law firm, Arthur Cox.