Medtronic (NYSE:MDT) said today that it will finance its mega-merger with Covidien (NYSE:COV) using $16 billion in "external financing" instead of the foreign cash it was planning to use, a move that sent shares of both companies soaring on Wall Street.

The move was prompted by the U.S. Treasury Dept.’s move last week to crack down on so-called "inversion deals," in which a U.S. company acquires a foreign entity – Covidien is domiciled in Ireland but runs its business from Massachusetts – and re-incorporates in that jurisdiction to avoid high corporate tax rates in the U.S.

All other terms of the deal are intact, according to a press release.

"This proposed acquisition was conceived and undertaken for strategic reasons and is intended to create a company that can treat more patients, in more ways and in more places around the world," Medtronic chairman & CEO Omar Ishrak said in prepared remarks. "We believe our combination will be uniquely positioned to help advance the goals of the Affordable Care Act in the U.S. as well as the objectives of virtually all health systems– to drive access to high-quality, affordable health care for patients around the world. Since the announcement of this transaction, we have worked closely with our Covidien colleagues to plan for the integration of these 2 leading companies, and we look forward to closing the transaction and realizing these strategic benefits."

Medtronic said the new financing terms won’t affect the deal’s impact on earnings.

"The transaction is still expected to be accretive to Medtronic’s cash earnings in FY2016, the 1st full fiscal year, and significantly accretive thereafter. The transaction is also expected to be neutral to GAAP earnings by FY2019 and accretive thereafter," according to the release.

Medtronic did not change its outlook for fiscal 2015 and said the deal is still on track to close later this year or in early 2015.

On Wall Street, news of the deal was warmly received by traders, who pushed shares of Medtronic up nealry 4% to $65.10 through mid day trading. Shares of Covidien were up nearly 6% to $93.97.

Analysts were similarly upbeat.

"Medtronic chose the least complicated, lowest risk structure, consistent with our views immediately following Treasury actions," Morgan Stanley analyst David Lewis wrote in a note to investors. "The deal is less valuable near-term, but may be neutral long-term. It still solves Medtronic’s significant cash problem and supports our thesis of increasing returns to shareholders."

Analysts for Standard & Poor’s Ratings services, however, said Medtronic will remain on credit watch with "negative implications."

"The proposed transaction strengthens Medtronic’s scale, product diversity, and market position, and could represent an additional competitive advantage for the company, offset by a considerable increase in financial risk," said credit analyst David Kaplan. "The recent changes to tax regulations relating to inversions is resulting in Medtronic funding the $16 billion cash portion of the transaction with debt, instead of a mix of cash and debt."