By Lisa Kerner
Charlotte, N.C., July 27 - Medtronic, Inc. agreed to acquire Kyphon Inc. for $71.00 per share in cash. Both companies' boards of directors have approved the transaction, which is valued at some $3.9 billion, excluding $320 million in payments related to the St. Francis Medical Technologies, Inc. and Disc-O-Tech Medical Technologies, Ltd. transactions.
The per-share price is a 32% premium over Kyphon's closing stock price on July 26 and a 35% premium over the 30-day average trading price.
Medtronic expects the transaction to close in the first quarter of 2008. It will be financed through cash on the balance sheet and debt.
"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," Medtronic chairman and chief executive officer Art Collins said in a company news release.
"We are very enthusiastic about the opportunity to deliver outstanding value for our shareholders that fully reflects Kyphon's innovation and growth potential," Kyphon president and CEO Richard Mott added. "This combination also offers our employees the opportunity to become part of an organization with a shared vision and the depth of resources that are increasingly beneficial for sustained success in our industry."
Medtronic's spinal surgery focus has been on younger patients suffering from scoliosis and degenerative disc disease in the cervical and lumbar spine. The company is based in Minneapolis. Kyphon, a Sunnyvale, Calif., medical device company, specializes in the treatment of older patients suffering from vertebral compression fractures and spinal stenosis.
Cleary Gottlieb Steen & Hamilton LLP, Goldman, Sachs & Co. and Piper Jaffray advised Medtronic. Kyphon was advised by Latham & Watkins LLP and JPMorgan.
| Acquirer: | Medtronic, Inc.
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| Target: | Kyphon Inc.
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| Transaction total: | $3.9 billion
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| Price per share: | $71.00
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| Announcement date: | July 27
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| Expected closing: | First quarter of 2008
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| Stock price for target: | Nasdaq: KYPH: $53.68 on July 26
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