Medtronic agrees to Acquire Vidamed

VidaMed's TUNA® System Strengthens Medtronic's Position in Urological Market

MINNEAPOLIS, Dec. 6, 2001 – Medtronic, Inc. (NYSE: MDT), announced today that it has agreed to acquire VidaMed, Inc. (Nasdaq: VIDA). VidaMed’s TUNA® (transurethral needle ablation) system treats benign prostatic hyperplasia (BPH), a non-cancerous condition also known as “enlarged prostate,” which affects up to 23 million men worldwide.

The agreement, valued at approximately $326 million in the aggregate, provides that each VidaMed shareholder will receive $7.91 per share in cash upon consummation of the transaction. Completion of the acquisition is subject to customary conditions, including approval by VidaMed shareholders, and Hart-Scott-Rodino clearance. The companies expect to complete the transaction during the first calendar quarter of 2002. Medtronic has held a minority investment in VidaMed since January 2000.

“The acquisition of VidaMed complements our rapidly growing Urological business, which includes the Medtronic InterStim® Therapy for Urinary Control and a full line of urological diagnostic products,” said Art Collins, Medtronic president and chief executive officer.

“We believe VidaMed’s patented TUNA therapy provides a compelling alternative to a lifelong commitment to drugs or radical surgery that can have significant side-effects,” added Scott Ward, president of Medtronic Neurological and Diabetes.

About 50 percent of men over 50, and 80 percent of men over 80, suffer from BPH, a progressive and naturally occurring condition that affects the prostate gland. The prostate surrounds the urethra and forms part of the male reproductive system. The gland enlarges with age until it partially closes the urethra and restricts urine flow from the bladder. This creates significant lifestyle issues, including the frequent and urgent need to urinate, especially at night.

Currently, the three primary therapies approved for treatment of BPH are medications, surgery and ablation. Men on drug therapy frequently experience side-effects such as nausea and dizziness. Oral medications may also become less effective over time. Those who undergo surgery can experience undesirable side-effects, including incontinence and/or sexual dysfunction. VidaMed’s non-surgical TUNA therapy can be completed in the urologist’s office in less than 30 minutes, requires minimal anesthesia and allows men to return to normal activities within 24 hours. The system delivers low-level, precisely controlled radiofrequency energy directly into the prostate to diminish obstructing tissue.

VidaMed’s TUNA therapy received marketing clearance from the U.S. Food and Drug Administration in 1996 and was approved by Medicare for in-office reimbursement on Jan. 1, 2000. More than 25,000 TUNA procedures have been performed worldwide.

Founded in 1992 and headquartered in Fremont, Calif., VidaMed had revenues of $8.2 million in fiscal 2000.

Medtronic, Inc., headquartered in Minneapolis, is the world’s leading medical technology company, providing lifelong solutions for people with chronic disease. Its Internet address is www.medtronic.com

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