Medtronic’s $43 billion Covidien deal may signal more to come
Medtronic 's deal to buy Covidien for $42.9 billion may just be the first domino in a lineup that consolidates the medical-device industry.

The acquisition, announced Sunday night, brings together the No. 4 and No. 8 players in medical devices to create the second-largest company in the industry, after Johnson & Johnson , according to Wells Fargo analyst Larry Biegelsen. While Medtronic will reincorporate in Covidien's home country, Ireland, in yet another inversion to take advantage of lower taxes outside the U.S., this deal is driven by more than tax considerations.

Read MoreMedtronic's$43B Covidien deal—and Irish tax move

"We believe that the Covidien deal is being driven by the need for Medtronic to have access to its OUS [outside the U.S.] cash, management's interest in becoming more relevant to hospitals by gaining scale across multiple segments of medical technology, and cost savings," Biegelsen wrote in a Monday research note. Medtronic has about $14 billion in cash, most of it outside the U.S.

