Johnson & Johnson to Acquire Shockwave Medical for $13.1 Bn

With this acquisition, Johnson & Johnson aims to bolster its position in cardiovascular intervention, one of the fastest-growing global medtech markets.

In a recent development, Johnson & Johnson has announced plans to acquire US-based Shockwave Medical for $13.2 billion.

Reportedly, Johnson & Johnson has entered into a definitive agreement with Shockwave to acquire all outstanding shares of the latter for $335.00 per share in cash, amounting to an enterprise value of approximately $13.1 billion, including cash acquired.

This transaction, approved by both companies' boards of directors, marks a strategic endeavor for Johnson & Johnson to expand its presence in cardiovascular intervention and tap into higher-growth markets.

The acquisition of Shockwave aligns with Johnson & Johnson's strategic focus on innovative medicine and medtech, particularly in addressing cardiovascular disease, which remains the leading cause of death globally.

With this acquisition, Johnson & Johnson aims to bolster its position in cardiovascular intervention, which is one of the fastest-growing global medtech markets with substantial unmet patient needs.

Impact on Cardiovascular Treatment

The addition of Shockwave in Johnson & Johnson's medtech portfolio extends its reach into two high-growth segments of cardiovascular intervention including coronary artery disease (CAD) and peripheral artery disease (PAD).

Shockwave is renowned for its innovative intravascular lithotripsy (IVL) technology, which offers a minimally invasive treatment for calcified arterial lesions in both CAD and PAD cases.

This technology, combined with Johnson & Johnson's existing expertise, is expected to enhance patient outcomes and treatment options in cardiovascular care significantly.

This acquisition follows Johnson & Johnson medtech's successful acquisitions of Abiomed and Laminar, reinforcing its commitment to advancing healthcare solutions.

By integrating Shockwave's IVL technology, Johnson & Johnson aims to solidify its position as a category leader in four high-growth cardiovascular segments.

Shockwave's IVL technology utilizes sonic pressure waves to crack calcium lesions in arterial walls, thereby restoring blood flow and alleviating symptoms such as pain or heart attack.

With claims of treating approximately 400,000 patients globally, Shockwave has established itself as a pioneer in intravascular lithotripsy, providing innovative solutions for complex cardiovascular conditions.

Shockwave's pipeline includes advancements in CAD and PAD treatment, as well as potential applications in new indications such as carotid artery disease and structural heart disease.

Additionally, Shockwave's recent acquisition of Neovasc and its reducer system for refractory angina further expands its product portfolio and market presence.

Operational & Financial Implications

The transaction is expected to be operationally accretive upon closing, although it is projected to have a slightly dilutive effect on adjusted earnings per share in 2024 and 2025.

Further, Johnson & Johnson plans to fund the acquisition through a combination of cash on hand and debt while maintaining a solid balance sheet to support its capital allocation priorities.

Following the completion of the transaction, Shockwave will operate as a business unit within Johnson & Johnson Medtech. Michael Bodner, global head, Heart Recovery at Johnson & Johnson, will assume responsibility for the Shockwave business unit.

Isaac Zacharias, Shockwave's president and chief commercial officer, will transition to become Worldwide president of Shockwave, reporting to Michael Bodner. Shockwave's president and CEO, Doug Godshall, will provide advisory support through the transition phase.

The closing of the transaction is anticipated to occur by mid-year 2024, subject to shareholder and regulatory approvals. Upon completion, Shockwave's common stock will no longer be listed for trading on the Nasdaq Global Select Market.

JP Morgan Securities LLC is serving as financial advisor to Johnson & Johnson, while Freshfields Bruckhaus Deringer LLP is providing legal counsel. Perella Weinberg partners is acting as financial advisor to Shockwave, with legal advisory services from Fenwick & West LLP.