J&J to acquire Shockwave Medical in $13.1 billion heart-disease-treatment play

Johnson & Johnson has agreed to acquire Shockwave Medical Inc. in an all-cash deal with an enterprise value of about $13 billion, in a move that will boost its share of the market for medical devices to treat heart disease.

Under the terms of the deal, J&J JNJ, +0.08% will pay $335 a share in cash, equal to a 4.7% premium over Shockwave’s SWAV, -0.08% closing price Thursday at $319.99. The deal was first reported by the Wall Street Journal in late March.

The deal will bolster J&J’s position in cardiovascular intervention and help its shift into higher-growth markets, the companies said in a joint statement. Santa Clara, Calif.-based Shockwave, which was founded in 2009, makes technology to treat coronary artery disease, or CAD, and peripheral artery disease, or PAD. The company’s main technology is intravascular lithotripsy, or IVL, a technology that treats calcified CAD and PAD.

The deal comes after J&J’s MedTech acquired Abiomed, which specializes in heart recovery; and Laminar, which makes devices for patients with non-valvular atrial fibrillation — a condition that raises patients’ risk of having a stroke. The health giant has been investing in medical devices following a split with its consumer-health business, which was completed last year.

The company announced its acquisition of Abiomed in November of 2022 for $16.6 billion in cash and stock, and unveiled its purchase of Laminar in November of 2023 for $400 million.

“The acquisition of Shockwave, together with Abiomed and Laminar, complements Johnson & Johnson established global leadership position in electrophysiology through Biosense Webster, building a highly differentiated cardiovascular portfolio,” Johnson & Johnson Chief Executive Joaquin Duato told analysts on a call to discuss the deal.

The deal is expected to boost sales and be accretive to operating margin for J&J and its J&J MedTech unit, although it will dilute adjusted per-share earnings by about 10 cents in 2024 and about 17 cents in 2025.

The deal is expected to close by mid-year.

“Cardiovascular intervention is one of the fastest-growing global medtech markets, with significant unmet patient need,” said the statement. IVL is a “minimally invasive, catheter-based treatment for calcified arterial lesions, which can reduce blood flow and cause pain or heart attack,” it said.

Needham analysts said they expect the deal will complement J&J’s other businesses.

“We believe that the JNJ offer fairly values SWAV, do not expect any antitrust issues due to a lack of product overlap, and think that a higher bid is unlikely,” they wrote in an early note to clients.

Shockwave’s technology is the only one commercially available and has been used to treat about 400,000 patients globally across 70 countries.

Once the deal closes, Shockwave will operate as a business unit within J&J MedTech and financials will be reported as part of the company’s cardiovascular portfolio, which was previously called interventional solutions. Michael Bodner will run the business, adding to his current role at Abiomed as global head of heart recovery.

Doug Godshall, president and chief executive of Shockwave, told analysts the company is working to develop more devices, including one to treat another unmet need within cardiology, refractory angina. The company’s pipeline has quadrupled in two years with 27 development programs in progress, he said.

J&J Chief Financial Officer Joe Wolk said he expects the company to become J&J’s 13th priority platform within medtech with annual sales of at least $1 billion. The deal will be financed with a mix of cash on hand and debt.

Shockwave’s stock rose 1.8% Friday and has gained 69% in the year to date, while the S&P 500 SPX has gained 8%.

J&J was down 0.3% and has lost 3% in the year to date.

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