Already among the stronger exchange traded funds with a niche focus on just one health care industry, the iShares U.S. Medical Devices ETF (NYSEArca: IHI) could become the latest ETF to benefit from mergers and acquisitions.

On Saturday, the Wall Street Journal reported Medtronic (NYSE: MDT) could acquire rival Covidien (NYSE: COV) in a deal believed to be worth north of $40 billion. The Journal reported the deal could be announced as soon as today.

With a weight of 10.9%, Medtronic is IHI’s second-largest holding behind Abbott Laboratories (NYSE: ABT). Covidien is the $694.7 million ETF’s fifth-largest holding at a weight of 6.5%, according to iShares data.

Although other health care industry ETFs, such as those with heavy exposure to biotechnology firms or services providers, have been previously highlighted as housing batches of potential takeover targets, IHI has gone somewhat ignored as health care M&A play. [Health Care ETF Full of Takeover Targets]

However, active followers of medical device makers know the space is littered with credible takeover targets. For example, Morgan Stanley highlighted Becton Dickinson (NYSE: BDX), IHI’s seventh-largest holding, as a possible target earlier this year.

“There has been a flurry of merger activity lately among big medical-device makers as they seek to bulk up and lower costs as the overhauling of the U.S. health-care system puts pressure on the prices they can charge,” according to the Journal.

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