Medical device manufacturer, Medtronic revealed that it has decided to buy competitor Covidien for 42.9 billion dollars in cash and stock.

In order to benefit from Ireland's lower corporate tax rates, the combined company would have its executive offices in Dublin.

But the merged company would carry on functioning in Minneapolis. Medtronic employs over 8,000, people in Minneapolis, as mentioned by the company in its statement.

Medtronic, which is a US based company, is giving a 29 percent premium on Covidien's stock price as of Friday.

The deal is the most recent in a succession of acquisitions made by medical-device manufacturers. The companies are looking for expanding their offerings and reduce costs as a reaction to the price controls enforced by the country's new health care law.

Medtronic is into production of insulin pumps and pacemakers, among other products. Covidien, which is an Ireland-based company, is largely into surgical equipment.

Medtronic stated that on account of the savings made from the deal, it would spend an extra 10 billion dollars over the next decade in acquisitions, investments and research and development in the US.