Medtronic and Kyphon have signed a definitive merger agreement under which Medtronic will acquire all of the outstanding shares of Kyphon for US$71 per share in cash. The transaction, which was unanimously approved by the boards of directors of both companies, is valued at approximately US$3.9 billion. This excludes US$320 million in payments associated with the St Francis Medical Technologies, and Disc-O-Tech Medical Technologies transactions.
The transaction, which is anticipated to close in the first calendar quarter of 2008, is expected to be neutral to Medtronic earnings in the first full fiscal year after closing and accretive thereafter. Medtronic expects the merger to yield significant revenue, cost and tax synergies.
Art Collins, chairman and CEO of Medtronic said, "The combination will also enable more patients of all ages to receive the benefits of modern, minimally invasive spinal treatments earlier in their care, with life-style friendly options that are simpler, faster and less invasive than many traditional surgical treatments.
The two companies' product lines and geographic presence are highly complementary. While both companies have expertise in minimally invasive, highly effective treatments, Medtronic's spinal surgery focus has been on providing treatment options for younger patients who are suffering from scoliosis and degenerative disc disease in the cervical and lumbar spine. Kyphon's focus has been on treating older patients suffering from vertebral compression fractures and spinal stenosis. Together, the combined entity will be able to leverage its knowledge of modern fusion, dynamic stabilisation, artificial disc replacement, biologics, vertebral augmentation, interspinous process decompression, disc disease diagnosis, navigation and minimally invasive techniques to serve patients with a broader variety of spinal disorders in order to alleviate pain and restore health for more patients.
The combined entity will also have a larger and expanded base of customers than Medtronic serves alone. Medtronic primarily serves orthopaedic and neurological surgeons who specialise in spinal surgery. Kyphon serves these same physicians and also has a significant customer base with interventional radiologists and interventional neuroradiologists.
The transaction is subject to customary closing conditions, including approval by antitrust regulators as well as Kyphon shareholders.
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