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Former Medtronic CEO: Company should go ahead with Covidien merger

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Medtromic's 'Rising Man' symbol
The "Rising Man" symbol stands in front of the Fridley, Minn., based Medtronic.
Jim Mone/Associated Press

Former Medtronic CEO Bill George says he hopes the company will proceed with its controversial merger with Ireland-based Covidien.

The deal is subject to new U.S. Treasury department rules designed to make so-called tax inversion deals less financially attractive. Medtronic says it's studying the provisions.

The company would have to pay Covidien a so-called "break-up fee" of up to $850 million if Medtronic backs out.

But George says that won't be a major consideration as Medtronic decides how to proceed.

"That's 2 percent of the deal, of a $43 billion deal," George said. "The deal is worth a lot more value than that. It's going to produce a lot more profit than that in year one. So I don't think that is going to be the deciding factor here."

Medtronic's share price fell as much as 4 percent Tuesday following the Treasury department's Monday evening announcement of new provisions.

A tax inversion involves a U.S. firm merging with a foreign company, and reducing its US tax bill.

George spoke to The Daily Circuit's Tom Weber.