U.S. medical device maker Medtronic Inc said on Sunday it had agreed to buy Covidien Plc for $42.9 billion in cash and stock and move its executive base to Ireland in the latest transaction aiming for lower corporate tax rates abroad.

The merger of Medtronic, the world's largest stand-alone medical device maker, and Covidien, a maker of devices used in surgery, will create a close competitor to the medical device business of Johnson & Johnson Co.

The deal values each Covidien share at $93.22, paid for by $35.19 in cash and 0.956 Medtronic shares. This share consideration represents a 29 percent premium to Covidien's closing stock price on Friday, Medtronic said.

The combination, which will leave Covidien shareholders owning about 30 percent of the combined company, is expected to result in at least $850 million of annual pre-tax cost synergies by the end of fiscal year 2018, Medtronic said.

Medtronic said it would keep its operational headquarters in Minneapolis and pledged $10 billion in U.S. technology investments over the next 10 years.

The deal is expected to close in the fourth quarter of 2014 or early 2015, Medtronic said.

Perella Weinberg Partners LP, Cleary Gottlieb Steen & Hamilton LLP and A & L Goodbody advised Medtronic, while Goldman Sachs & Co and Wachtell, Lipton, Rosen & Katz and Arthur Cox advised Covidien. Bank of America Merrill Lynch provided committed financing for the transaction.