Johnson & Johnson recently announced a $13 billion deal to acquire Shockwave Medical, a company specializing in technology that helps open clogged arteries. This deal involves J&J spending $335 in cash for each share of Shockwave, with a total deal value that includes cash acquired. Founded in 2009, Shockwave uses intravascular lithotripsy technology to crack calcium lesions in arteries and restore blood flow. The company saw a significant revenue increase of 49% last year, reaching $730 million. J&J’s Chief Financial Officer, Joseph Wolk, expressed optimism about the growth potential of this technology, both in the United States and internationally, with expectations for annual sales to reach at least $1 billion.
J&J plans to finance this acquisition using cash on hand and debt. Wolk mentioned that the financing costs will impact the company’s adjusted earnings by 10 cents per share this year and 17 cents in 2025. This deal comes after J&J’s announcement of a $16 billion acquisition of another cardiovascular technology company, Abiomed. Both acquisitions are aimed at strengthening J&J’s MedTech division, one of the two key segments the company is focused on following the split of its consumer health division. The deal with Shockwave still requires approvals from regulators and shareholders, with the companies anticipating the acquisition to close by the middle of this year. Following the announcement, J&J’s stock saw a slight increase, as did the Dow Jones Industrial Average, of which J&J is a component.
The market for Shockwave’s technology is still described as being in the early stages of scaling up, presenting growth opportunities for J&J both domestically and internationally. The technology developed by Shockwave, which uses soundwave emitters placed inside angioplasty catheters to treat coronary artery and peripheral artery disease, has shown promise in effectively restoring blood flow in patients with clogged arteries. With the expected annual sales of $1 billion, J&J aims to further strengthen its position in the cardiovascular technology sector through this acquisition.
The agreement between J&J and Shockwave has been approved by the boards of both companies, paving the way for the acquisition process to move forward. By integrating Shockwave’s innovative technology into its portfolio, J&J seeks to enhance its capabilities in cardiovascular care, ultimately benefiting patients in need of advanced treatment options for arterial blockages. This strategic move aligns with J&J’s focus on driving innovation and growth in its MedTech division, as it continues to explore opportunities to expand and diversify its offerings in the healthcare sector.
As part of the deal, J&J plans to leverage its financial resources to fund the acquisition, using a combination of cash reserves and debt. While there may be some short-term impact on the company’s earnings due to financing costs, J&J remains confident in the long-term benefits that this acquisition will bring to its overall business strategy. With a commitment to advancing healthcare through cutting-edge technologies and strategic partnerships, J&J is poised to strengthen its position as a leader in the global healthcare industry, with a focus on providing innovative solutions for patients with complex medical conditions.
