The company said the diabetes business, which represented 8% of its revenue, will operate independently within 18 months through a series of capital markets transactions, with a preferred path of an initial public offering and subsequent split-off.

The transaction would help the diabetes business to grow more quickly and allow Medtronic to focus on expanding its other divisions, the company said.

The company added that the new unnamed company with about 8,000 employees will be led by Que Dallara, current president of Medtronic Diabetes.

The medical device maker said the separation is expected to boost its adjusted gross margin by around 50 basis points and operating margin by 100 basis points while being immediately accretive to adjusted earnings per share.

It will also reduce the company's dividend liability without impacting the per-share dividend, freeing up capital for growth investments, it added.

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