Medtronic and Arterial Vascular Engineering to Merge

Medtronic Inc. and Arterial Vascular Engineering Inc. (AVE) have announced that they will merge to form one of the world's leading interventional cardiology franchises in a transaction valued at $3.7 billion.

AVE's strong position in interventional cardiology will complement Medtronic's market-leading positions in the cardiac rhythm management, cardiac surgery, and neurological and spinal surgery fields. The agreement calls for Medtronic to exchange $54 in Medtronic stock for each share of AVE stock, in a pooling of interests transaction

"We are extremely pleased to be merging with AVE, as it provides the opportunity we have been seeking to move into a leadership role in the interventional field," said William W. George, chairman and chief executive officer of Medtronic. "During the past several years, under the direction of CEO Scott Solano, AVE has built itself into the world's leading cardiac stent company. The company's recent acquisition of the USCI interventional cardiology business of C.R. Bard and its pending merger with World Medical Manufacturing Corporation have broadened AVE's product lines. When combined with Medtronic's interventional business, AVE will give us a broad array of outstanding interventional products, one of the strongest development pipelines in the industry, and a very deep intellectual property portfolio. The combined Medtronic AVE vascular business will generate more than $1 billion in revenues next fiscal year, with tremendous growth potential over the next ten years."

AVE designs and manufactures minimally invasive solutions for the treatment of coronary artery and peripheral vascular disease and is the global technology leader in coronary stents. Its product offerings include coronary stents, balloon catheters, guidewires, and guiding catheters.

For Medtronic, AVE is the fifth major transaction announced since July 1998, all in its core cardiovascular and neurological and spinal surgery businesses. Its total investment in these mergers is $8 billion. The others include Sofamor Danek Group, Physio-Control International Corp., Avecor Cardiovascular, and Midas Rex L.P.

"These five mergers transform Medtronic into a truly unique corporation in the medical technology field, with anticipated revenues exceeding $5 billion in our next fiscal year, almost double our FY98 size," said George.

The transaction is subject to customary conditions, including approval by shareholders of AVE and Hart-Scott-Rodino clearance. The companies expect to complete the transaction in 90 to 120 days.