Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE

SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant x Filed by a Party other than the Registrant ¨

Check the appropriate box:

¨	Preliminary Proxy Statement

¨	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

¨	Definitive Proxy Statement

¨	Definitive Additional Materials

x	Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

KYPHON INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x	No fee required.

¨	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

Title of each class of securities to which transaction applies:

(2)

Aggregate number of securities to which transaction applies:

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

Proposed maximum aggregate value of transaction:

(5)

Total fee paid:

¨	Fee paid previously with preliminary materials:

¨	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing of which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount previously paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:

The following slides were made available during the course of meetings with and presentations to certain investors beginning on July 30, 2007:

Kyphon and Medtronic Proposed Acquisition

July 30, 2007

Forward-Looking Statements

This investor overview contains forward-looking statements within the meaning of the U.S. Private

Securities Litigation Reform Act of 1995. Forward looking statements include, but are not limited to,

those

that

use

words

such

“believes,”

“anticipates,”

“targets,”

“intends,”

“plans,”

“may,”

“estimates,”

“predicts,”

“future,”

“contemplates”

and

words

similar

effect.

These

forward-looking

statements

are

subject to a number of risks and uncertainties that may cause actual results to differ materially from

those contained in the forward-looking information, and are based on Kyphon’s current expectations,

estimates, forecasts and projections. Factors that could cause actual results to differ materially from

Kyphon’s current expectations include, without limitation, the following: Kyphon’s inability to obtain the

shareholder and regulatory approvals required for the proposed transaction, or to do so in a timely

manner; Kyphon’s inability to complete all closing conditions required for the proposed transaction;

unexpected costs or liabilities resulting from the proposed transaction; diversion of management’s

attention from the operations of the business as a result of preparations for the proposed merger; the

risk that announcement of the proposed merger may negatively effect Kyphon’s relationship with its

customers,

suppliers,

and

employees;

and

other

factors

described

the

section

entitled

“Risk

Factors”

Kyphon’s filings with the U.S. Securities and Exchange Commission (“SEC”) that are available on the

SEC’s

website

located

http://www.sec.gov,

including

Item

entitled

“Risk

Factors”

Kyphon’s

Form

10-K

for

the

fiscal

year

ended

December

31,

2006,

and

Part

II,

Item

entitled

“Risk

Factors”

Kyphon’s Form 10-Q for the fiscal quarter ended March 31, 2007. Readers are strongly urged to read the

full

cautionary

statements

contained

these

materials.

Actual

outcomes

and

results

may

differ

materially from what is expressed, expected, anticipated, or implied in any forward-looking statement.

Kyphon disclaims any intent or obligation to update these forward-looking statements beyond the date of

this overview.

Important Additional Information

Kyphon intends to file with the Securities and Exchange Commission (“SEC”) a proxy statement

and other relevant documents in connection with the proposed acquisition. KYPHON’S

STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT

DOCUMENTS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT

INFORMATION ABOUT KYPHON, MEDTRONIC AND THE PROPOSED TRANSACTION.

Stockholders may obtain free copies of the proxy statement and other relevant documents filed

with the SEC (when they become available) at the SEC’s website at www.sec.gov and at

Kyphon’s website at www.kyphon.com. In addition, stockholders may obtain free copies of the

proxy statement (when it becomes available) by writing to 1221 Crossman Avenue, Sunnyvale

CA 94089-2450, Attention: Julie Tracy or by emailing jtracy@kyphon.com.

Kyphon, Medtronic and their respective directors, executive officers, and certain other members

of management and employees may be deemed to be participants in the solicitation of proxies

in connection with the proposed merger. You can find information about Kyphon’s directors and

executive officers in Kyphon’s Proxy Statement relating to its 2007 Annual Meeting of

Stockholders, as filed with the SEC on April 30, 2007. You can find information about

Medtronic’s executive officers and directors in its definitive proxy statement filed with the SEC

on July 20, 2007. Additional information regarding the persons who may, under the rules of the

SEC, be deemed participants in the solicitation of proxies in connection with the proposed

merger,

and

description

their

direct

and

indirect

interests

the

proposed

merger,

will

set forth in the proxy statement relating to the proposed acquisition when it is filed with the

SEC.

Transaction Overview

Anticipated Close

Consideration

Customary Approvals

In first calendar quarter of 2008, subject to satisfaction or waiver of

closing conditions

$71.00 per share in cash

32% over closing price of Kyphon’s common stock on July 26, 2007

(last trading day prior to announcement)

35% over Kyphon’s 30-day avg. trading price of $52.76 per share

45% over Kyphon’s share price one month prior to announcement

Kyphon shareholder approval, clearance by U.S. and certain non-U.S.

antitrust regulators and other customary conditions

$3.9 billion plus $320 million in payments associated with St. Francis

Medical, Inc. acquisition and proposed acquisition of spine-related

assets of Disc-O-Tech Medical Technologies, Ltd.

Delivering Significant and Immediate Value to Kyphon Shareholders

Transaction Value

Premium to Kyphon

Share Price

Spine/ortho transaction comps ($ millions)

Date

announced

Target company

Acquiror

Business description

Transaction

value (TV)

TV / LTM

Sales

TV / FTM

Sales

07/27/2007

Kyphon¹

Medtronic

Medical technology for spine

$4,351

9.8x

7.0x

12/18/2006

Biomet

Private equity investors

Orthopedic products

$10,885

5.3x

4.9x

12/04/2006

St. Francis

Kyphon

Less invasive spinal implant

$725

18.1x

7.6x

08/07/2006

Blackstone Medical

Orthofix

Spinal implants

$333

5.6x

03/08/2004

Interpore International

Biomet

Spinal implants

$267

3.8x

3.3x

08/13/2003

Mathys

Synthes-Stratec

Joint-replacement products

$1,104

3.9x

06/02/2003

Spinal Concepts

Abbott

Spinal fixation/implants

$170

4.4x

2.7x

05/20/2003

Centerpulse

Zimmer

Spinal and dental implants

$3,393

3.6x

3.3x

11/02/1998

Sofamor Danek

Medtronic

Spinal and neurosurgery

$3,515

9.4x

7.6x

08/14/1998

Howmedica

Stryker

Orthopedic implants

$1,900

2.3x

07/21/1998

DePuy

Johnson & Johnson

Orthopedic implants

$3,376

4.3x

3.7x

12/16/1997

Spine-Tech

Sulzer Medica

Spinal implants

$600

13.2x

6.8x

Mean

7.0x

5.2x

Median

4.9x

Source: Company filings, press releases

Kyphon LTM metrics as of 3/31/07; transaction value based on balance sheet figures as of 3/13/07 and includes the contingent payments related to the acquisitions of St. Francis and Disc-O-Tech as well as the cost associated with

early repayment of convertible debt due to the change in control

Selected precedent transactions

Announced

deals

with

target,

2004

—

Q12007,

average

premium

announcement

29%

37%

38%

25%

30%

All M&A

Technology and Healthcare M&A

Medical Technology M&A

Mean

Median

One-month premium¹

Source: Public filings, equity research

Premium offered to target's shareholders based on target's closing share price one month before announcement

Precedent premiums

Selected transactions¹

Premium paid

Target name

1-day

30-day

Kyphon

32.3%

45.4%

Cytyc

32.6%

32.4%

Biomet

4.8%

26.7%

Conor Medsystems

23.8%

38.0%

Laserscope

44.8%

43.6%

Advanced Neuromodulation Systems

30.4%

19.9%

Alaris Medical Systems

18.4%

20.7%

TheraSense

33.0%

47.8%

Sofamor Danek

13.2%

35.3%

Mean

25.9%

34.4%

Median

30.4%

35.3%

High

44.8%

47.8%

Low

4.8%

19.9%

Medtronic’s acquisition of Kyphon represents a 32% premium over

Kyphon’s closing share price as of July 26, 2007 and a 45% premium over

Kyphon’s closing share of $48.83 one month before announcement

Precedent premiums

Kyphon at a Glance

Medical device company focused on minimally invasive spine market

Pioneered balloon kyphoplasty -

a novel procedure for repairing vertebral

compression fractures

Three product platforms serve estimated $6 billion potential market

–

Spinal Fracture Repair & Management (~$3 billion)

–

Spinal Motion Preservation (~$2 billion)

–

Disc Disease Diagnosis and Therapies (~$1+ billion)

Products sold in 45 countries

–

Headquarters in Sunnyvale, CA

–

1,200 employees worldwide

Two recent transactions

–

Acquired St. Francis Medical Technologies, Inc. in January 2007

–

Proposed acquisition of spine-related assets of Disc-O-Tech Medical

Technologies, Ltd. in December 2006

Medtronic at a Glance

Medtronic is the global leader in medical technology -

alleviating pain,

restoring health, and extending life for millions of people around the world

Founded in 1949, the company’s FY07 revenues were $12.3 billion

Seven sectors serve estimated $80 billion potential market

–

Cardiac Rhythm Disease Management

–

Spinal and Navigation

–

Vascular

–

Neuromodulation

–

Diabetes

–

Ear, Nose & Throat

–

Physio-control

Products sold in 120 countries

–

Medtronic World Headquarters is located in Minneapolis, MN

Regional Headquarters include Switzerland and Japan

–

The company employs 37,000 people worldwide

Every five seconds, somewhere in the world, a person’s life is saved or

improved by a Medtronic product or therapy

Creating a Global Leader in the Minimally

Invasive Spine Market

Creating a Global Leader in the Minimally

Invasive Spine Market

Allows more patients of all ages to receive benefits of modern, minimally

invasive spinal treatments earlier in care

Combines two world-class sales organizations to better serve our patients

and clinicians

Extends product offerings into some of fastest growing product segments

Enables us to provide physicians with broader range of therapies

for use at

all stages of care continuum

Leverages both organizations’

expertise in developing and marketing

innovative products

Combination meaningfully increases ability to ensure we meet needs

of clinician customers around the world and patients they serve

Roadmap To Completion

Event

Expected Timeline

Execute definitive agreement

Kyphon shareholder vote

Receive all regulatory clearances

Close transaction

Completed

3-5 months

First calendar quarter of 2008

Targeted in first calendar quarter

of 2008

Conclusion

Offers outstanding premium and immediate return on investment for

shareholders

Provides Kyphon with a stronger platform for growth

Leverages combined organization’s world-class sales forces and

expertise in developing and marketing innovative products

Anticipated to close in first calendar quarter of 2008, subject to receipt

of shareholder approval and regulatory clearances and satisfaction or

waiver of other customary conditions