Johnson & Johnson (J&J) is reinforcing its commitment to heart care by injecting approximately $13 billion into its MedTech business through a deal with Shockwave Medical, a specialist in technology aimed at opening clogged arteries.
Announced on Friday, the healthcare behemoth disclosed its plan to acquire Shockwave at a rate of $335 in cash per share. The total deal value encompasses cash acquired and has garnered approval from the boards of directors of both companies.
Established in 2009, Shockwave focuses on intravascular lithotripsy technology, utilizing sonic pressure waves to rupture calcium lesions in arteries, thereby restoring blood flow. This technique, akin to breaking up kidney stones, employs soundwave emitters inserted into angioplasty catheters to target calcified areas within arteries, particularly addressing coronary artery and peripheral artery disease.
Shockwave experienced a substantial revenue surge of 49% last year, reaching $730 million. J&J’s Chief Financial Officer, Joseph Wolk, emphasized to analysts that the market for this technology is still in its early stages of expansion, foreseeing growth opportunities both domestically and internationally, with projected annual sales anticipated to surpass $1 billion.
To fund the acquisition, J&J will utilize cash reserves and debt, with anticipated financing costs expected to impact adjusted earnings by 10 cents per share in the current year and by 17 cents in 2025, according to Wolk.
This deal follows J&J’s previous announcement over a year ago, wherein it revealed a $16 billion investment in acquiring Abiomed, another cardiovascular technology company. Both acquisitions are anticipated to fortify J&J’s MedTech division, one of the two remaining segments post the divestment of its consumer health division, known for brands like Band-Aid and beauty products.
The completion of J&J’s Shockwave deal remains contingent upon regulatory and shareholder approvals, with both companies aiming to finalize the acquisition by mid-year. Following the announcement, shares of J&J, headquartered in New Brunswick, New Jersey, saw a modest increase of 32 cents to $152.82, while Shockwave Medical Inc., headquartered in Santa Clara, California, surged over $5 to $325.50.
Gary P Hernal started college at UP Diliman and received his BA in Economics from San Sebastian College, Manila, and Masters in Information Systems Management from Keller Graduate School of Management of DeVry University in Oak Brook, IL. He has 25 years of copy editing and management experience at Thomson West, a subsidiary of Thomson Reuters.
