Medical technology company Medtronic Inc. said on Friday that it would acquire Kyphon Inc. for $3.9 billion to expand its spinal treatment business.

Medtronic will acquire all of medical device maker Kyphon's outstanding stock and pay about $71 per share in cash. The offer represents a 32 percent premium over Kyphon's closing price on Thursday, the company said.

The deal, which is anticipated to close in the first calendar quarter of 2008, is expected to be neutral to Medtronic earnings in the first full fiscal year after closing and boost earnings thereafter. Medtronic expects the deal to generate revenue, cost and tax benefits.

The deal will allow the Medtronic to broaden its product line, expertise and customer base, the company said.

Medtronic's spinal focus has been on providing treatment options for younger patients who are suffering from scoliosis and degenerative disc disease in the cervical and lumbar spine. It primarily serves orthopedic and neurological surgeons who specialize in spinal surgery.

Kyphon, meanwhile, has focused has been on treating older patients suffering from vertebral compression fractures and spinal stenosis.

Goldman, Sachs & Co. and Piper Jaffray served as financial advisors to Medtronic, while JPMorgan acted as financial advisor for Kyphon.

(Reporting by Anupreeta Das in New York and Jessica Hall in Philadelphia)