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Medtronic, Sofamor merge
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November 2, 1998: 8:18 a.m. ET
Sofamor Danek shares valued at $115 in $3B stock swap; charges expected
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NEW YORK (CNNfn) - Medical products companies Medtronic Inc. and Sofamor Danek Group Inc. agreed to merge in a stock swap valued in excess of $3 billion, the companies said Monday.
The transaction will create a leading provider of neurological and spinal disorders treatments with projected revenue next year of more than $1 billion and annual growth estimated at 25 percent.
Sofamor Danek revenues for 1998 are expected to approach $400 million.
The agreement was approved unanimously by both boards.
Based on the terms of the merger, Medtronic agreed to pay $115 in stock for each share of Sofamor Danek, which had 29 million shares outstanding as of Sept 30. The exact price will be determined by a trading collar between $69.63 and $56.97 per Medtronic share.
Medtronic stock (MDT) closed Friday down 1-1/8 at 65 while Sofamor shares (SDG) closed up 4-7/16 at 101-5/8.
"The product lines of Medtronic and Sofamor Danek are highly complementary. By combining the technology ... we will be able to develop new and better solutions more quickly and deliver these solutions to doctors and their patients faster," E.R. Pickard, chairman and chief executive of Sofamor Danek, said.
Pickard will continue to head Sofamor Danek but will report to John Meslow, who was appointed president of Medtronic's new neurological and spinal business.
Medtronic declined to specify the amount of one-rime charges related to the merger.
The merger is expected to be neutral to earnings in the current year and add "several cents a share" in fiscal 2000, becoming increasingly accretive in the following years.
The transaction, which is structured as a tax-free pooling of interests, is subject to Sofamor Danek shareholder approval, regulatory approvals and other customary closing conditions. 
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Medtronic
Sofamor Danek
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