Johnson & Johnson announced on Friday its agreement to acquire Shockwave Medical for $12.5 billion, a move aimed at expanding its range of medical devices for treating heart diseases.
With this acquisition, J&J gains access to a groundbreaking device that utilizes shockwaves to dissolve calcified plaque in heart vessels, a method akin to the treatment of kidney stones.
Analysts at RBC estimate the potential market for similar therapies to be around $10 billion.
This deal aligns with J&J’s strategy of strengthening various segments of its business, particularly as its flagship Crohn’s disease drug, Stelara, faces increased competition in the United States next year.
In recent years, J&J has made significant investments to enhance its cardiac health division, including the $16.6 billion acquisition of heart pump manufacturer Abiomed in 2022 and the $400 million purchase of another heart-focused device maker, Laminar.
Analyst Shejal Ajmera from CRISPIdea views J&J’s latest move as entering an “opportunistic space” and is eager to see how aggressively the company will leverage this acquisition to generate revenue.
Under the terms of the agreement, J&J will pay $335 per share in cash, representing a 17% premium to Shockwave’s closing stock price in late March when J&J’s interest was first reported by the Wall Street Journal.
Shockwave shares saw an uptick of nearly 2% to $325.50 in early trading following the announcement.
The enterprise value of the deal, including cash acquired, is approximately $13.1 billion. This valuation is based on Shockwave’s outstanding share count of 37.40 million, according to data from LSEG.
Shockwave’s intravascular lithotripsy (IVL) treatment, delivered via catheter, is utilized alongside stents to address two heart conditions characterized by arterial blockages due to calcium deposits.
In 2023, Shockwave reported product sales of $730.2 million. J&J intends to finance the acquisition through a combination of existing cash reserves and debt.
J.P. Morgan Securities LLC serves as J&J’s financial adviser for the deal, while Perella Weinberg Partners advises Shockwave.
