8:15AM Medtronic agreed to buy Kyphon for $3.9 billion.

Medical technology group Medtronic Inc. (MDT: chart) announced on Friday an agreement to buy Kyphon Inc. (KYPH: chart) for $3.9 billion, or $71 a share. The transaction represents a 32% premium to Kyphon''s closing price of $53.68 on Thursday. The deal is expected to close in the first quarter of 2008. It is not expected to contribute to earnings in the first full year after the deal and provide a boost to the bottom line after that.

The acquisition is expected to biist the growth of Medtronic''s existing spinal business and enable it to provide physicians with a broader range of therapies, the company said. Separately Kyphon, a developer of medical devices to restore and preserve spinal function, said it earned 23 cents-a-share in Q2, up from 21 cents-a-share a year earlier.