Earlier this week US medical device giant Medtronic Inc. (NYSE: MDT) acquired Kyphon Inc. (Nasdaq: KYPH), which specializes in devices for treating spinal disorders, for $3.9 billion. This comes after Kyphon recently made two major deals of its own. It acquired St. Francis Medical Technologies Inc., as well as the spine-related product assets and associated intellectual property rights of Disc-O-Tech Medical Technologies, Ltd..
For Disc-o-Tech, which was co-founded by Dr. Mordechay Beyar, and Prof. Rafael Beyar, Lewis Pell, Oren Globerman, and Shlomo Ben Haim, this is not a significant change. Its technology may be switching to the ownership of a larger, more influential company, but the payments it should be receiving are not contingent on achieving milestones, so the change in ownership is not crucial.
Under its contract with Kyphon, Disc-O-Tech received an immediate payment of $60 million, and a further $40 million on the transfer of two other products in February 2007. It is due to receive an additional $120 million in three equal annual installments beginning in January 2008 for its Confidence System assets.
Medtronic has activity in non-invasive spinal procedures, and says it is interested in Kyphon principally because of its expertise in this field. Disc-O-Tech's treatments also come under the same category, so they could well find their way on to the market, under the new owners. Medtronic previously acquired another company owned by Pell and Ben Haim - InStent Ltd.- for $220 million. Disc-O-Tech has additional devices for hip and thigh surgery, which it will retain ownership of following the completion of the deal.
Published by Globes [online], Israel business news - www.globes.co.il - on August 1, 2007
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