, a maker of medical devices, set plans to acquire privately held St. Francis Medical Technologies, sending its shares higher Monday.
Kyphon will buy St. Francis for $525 million in cash, plus additional revenue-based contingent payments of up to $200 million. Any contingent payments won't be made before 2008.
Pending regulatory approval, Kyphon expects to close the deal in the first quarter. Upon closing, Kyphon will incur an estimated charge of roughly $35 million to $50 million for acquired in-process research and development expenses.
Shares of Kyphon gained 23.1% to $41.27.
While the company says it's too early to determine the exact impact on next year's earnings, the transaction will likely be "significantly dilutive."
Excluding the in-process R&D charge, Kyphon believes the acquisition will cut the company's bottom line by 15 cents to 20 cents a share in 2007. Stripping out the charge and the noncash amortization of intangibles, the company expects the deal to be neutral or better, possibly adding 10 cents a share to next year's adjusted earnings.
Starting in 2008, Kyphon says the transaction should "significantly" add to its earnings.