Medtronic to acquire Kyphon in a merger agreement valued at $3.9 billion

The transaction is expected to close during the first quarter of 2008.

MINNEAPOLIS — Medtronic Inc. and Kyphon have signed a definitive merger agreement through which Medtronic will acquire all outstanding shares of Kyphon for $71 per share in cash, the companies announced in a press release.

The boards of directors for both companies unanimously approved the transaction, which is valued at approximately $3.9 billion. This price represents a 32% premium over Kyphon's closing stock price on July 26, 2007 of $53.68 and a 35% premium over Kyphon's 30-day average trading price of $52.76 per share.

Medtronic expects to complete the transaction during the first quarter of 2008 transaction and does not expect it to impact the company's earnings for the first full fiscal year after closing.

However, the transaction remains subject to customary closing conditions, including approval by antitrust regulators and Kyphon's shareholders.

"We expect our combination with Kyphon to help accelerate the growth of Medtronic's existing spinal business by extending our product offerings into some of the fastest growing product segments and enabling us to provide physicians with a broader range of therapies for use at all stages of the care continuum," said Art Collins, Medtronic's chairman and CEO, in the release.

Kyphon's employees, including its global sales force, will be integrated into Medtronic at the close of the transaction.

"Our board of directors believes that this acquisition is in the best interests of our shareholders, employees and other stakeholders, and has unanimously voted to recommend that Kyphon shareholders vote in favor of it," Richard Mott, president and CEO of Kyphon, said in the release.