Medtronic expands spinal business with acquisition of Kyphon for
3 August 2007
Minneapolis, USA. Medtronic, Inc. (NYSE: MDT) is
strengthening its spinal business with the acquisition of Kyphon (NASDAQ:
KYPH) for US$3.9 billion in a move seen as complementary in product range
and geographical markets. The price represents a 32% premium over Kyphon's
closing share price on July 26.
"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,
chairman and chief executive officer of Medtronic.
"Importantly, 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.
are very enthusiastic about the opportunity to deliver outstanding value for
our shareholders that fully reflects Kyphon's innovation and growth
potential. This merger also combines two recognized industry leaders in
spinal treatments," said Richard Mott, president and chief executive officer
of Kyphon. "By merging our complementary strengths and collective resources
into one organization, we will meaningfully increase our ability to ensure
we meet the needs of our clinician customers around the world and the
patients they serve."
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
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
stabilization, 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 specialize in spinal
surgery. Kyphon serves these same physicians and also has a significant
customer base with interventional radiologists and interventional
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.
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