By spending almost $13 billion to acquire Shockwave Medical, a company that develops technologies to assist open blocked arteries, Johnson & Johnson is increasing its financial commitment to the heart health sector.
The massive player in healthcare announced on Friday that it will pay $335 in cash for each Shockwave share. Acquired cash is included in the deal value.
Both firms’ boards of directors have previously given their approval to the merger.
Shockwave was founded in 2009 and specializes in intravascular lithotripsy, a technique that cracks calcium plaques in arteries and restores blood flow using sonic pressure waves. It resembles a method for breaking up kidney stones. To access the calcified portions of the artery, sound wave emitters are inserted into angioplasty catheters.
Peripheral artery disease and coronary artery disease are treated with Shockwave’s technology.
Last year the company’s revenue increased by 49% to $730 million. According to Joseph Wolk, Chief Financial Officer of J&J, the market for this technology is still “in the early days of scaling up,” he told analysts on Friday.
Laptops 1000According to him, there is potential for further expansion both domestically and internationally, and the business anticipates at least $1 billion in sales annually.
To finance the purchase, J&J will employ both debt and available cash. According to Wolk, financing expenses will reduce the business’s adjusted earnings by 10 cents per share this year and 17 cents in 2025.
The agreement was reached more than a year after J&J declared it would invest $16 billion to acquire Abiomed, a different provider of cardiovascular technologies. It is anticipated that these acquisitions will strengthen J&J’s MedTech, or medical device, business.
After separating its consumer health section, which sells Band-Aids and cosmetics, the company is concentrating on the remaining two segments: medicines and that one.
Shareholders and regulators still need to approve J&J’s Shockwave transaction. By the middle of this year, the companies want to complete the transaction.
After the markets opened on Friday, shares of J&J, based in New Brunswick, New Jersey, increased by 32 cents to $152.82. Additionally, there was a modest increase in the Dow Jones Industrial Average, of which J&J is a part.
The Santa Clara, California-based Shockwave Medical Inc. saw a rise of more than $5 to $325.50.
