Medical device manufacturer Medtronic, Inc based in the U.S. on Sunday said it entered into an agreement to purchase Covidien Plc in cash and stock for $42.89 billion. Medtronic said it would relocate its executive offices to Ireland after its most recent transaction looking to lower the rates of corporate tax abroad.

While this deal gives Medtronic the opportunity to lower its global tax responsibilities, the company, based in Minneapolis, said it had been pushed by the complementary strategy on medical technology with Covidien rather than the tax considerations.

Corporate tax rates for Medtronic are now at 18% and won’t change all that much, said one analyst.

Medtronic, the largest maker of medical devices in the world, and Covidien is the maker of devices used in different surgical procedures. This merger will produce a big competitor in the world’s medical device sector for Johnson & Johnson the industry leader.

It also broadens the scope of Medtronic beyond its spinal implants, heart devices, insulin pumps as well as other medical products into such areas as laparoscopic procedures and surgery for weight loss.

The expansion will allow Medtronic to compete better for business that comes from the U.S. hospitals where reform in healthcare and shrinking reimbursement from the government for many medical procedures have weighed on the prices of their devices.

The difference amongst the two companies means antitrust concerns should be great, one analyst said.

It is estimated that the merger will cut up to 3% off the tax rate of the company, pointing to the 16% of Covidien.

The deal puts a value of Covidien at $93.23 per share, which will be paid by cash at $35.19 per share and 0.95 in Medtronic shares.

This transaction is a premium of 29% over the closing price of Covidien’s stock on Friday.

The new company will leave shareholders at Covidien with 30% and should result in cost synergies pre-tax annually of $850 million by the 2018 fiscal year end.

Medtronic said the operational headquarters would remain in Minneapolis. The company pledged investments of $10 billion in technology in the U.S. over the upcoming 10 years.