J&J to buy Abiomed in $16.6B deal to boost cardiovascular business

Deal comes at a time when J&J is spinning off its consumer health business

Johnson & Johnson (J&J) is buying Abiomed, a first-to-market provider of cardiovascular medical technology, for $380 per share in cash. The transaction moves the world's largest healthcare company deeper into treating heart disease and continues a shift started last year away from its consumer health roots.

Abiomed designs products that provide circulatory support and oxygenation which enable the heart to rest by improving blood flow and/or the pumping of the heart.

"The addition of Abiomed is an important step in the execution of our strategic priorities and our vision for the new Johnson & Johnson focused on Pharmaceutical and MedTech," said J&J CEO Joaquin Duato.

Abiomed will add, among other products, its Impella heart pumps, which are inserted through arteries into the hearts of high-risk patients. The pumps temporarily help the heart maintain blood flow while a surgeon places stents in the patient.

Abiomed sales jumped 22% to exceed $1 billion in its most recent fiscal year. That is well over twice the annual sales it booked just five years ago.

Johnson & Johnson CEO Joaquin Duato (L-R), Actelion founder Jean-Paul Clozel and Johnson & Johnson Chief Scientific Officer Pharmaceuticals Paul Stoffels pose for photographers at Actelion headquarters in Allschwil, Switzerland Jan. 26, 2017. (Reuters/Arnd Wiegmann)

New Brunswick, N.J.-based J&J agreed to pay a 50% premium over Abiomed’s closing price of $252.08 per share on Monday, in a transaction that corresponds to an enterprise valuation of $16.6 billion. Along with the upfront cash payment, Abiomed shareholders will also receive a non-tradeable contingent value right entitling the holder to receive up to $35.00 per share in cash if certain commercial and clinical milestones are achieved.

Johnson & Johnson expects to fund the transaction through a combination of cash on hand and short-term financing. The acquisition is expected to be neutral or to slightly dilute adjusted earnings in the first year after its completion and then accretive by approximately 5 cents in 2024 and increasingly accretive thereafter.

Abiomed

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Ticker Security Last Change Change %
ABMD ABIOMED INC. 381.02 +0.23 +0.06%

Abiomed will run as a stand-alone business within J&J’s medical device segment once the deal is completed. 

The transaction is expected to be completed prior to the end of the first quarter of 2023 and is conditioned on the tender of a majority of the outstanding shares of Abiomed’s common stock, as well as the receipt of applicable regulatory approvals and other customary closing conditions. 

The boards of both companies have already approved the deal.

Johnson & Johnson

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Ticker Security Last Change Change %
JNJ JOHNSON & JOHNSON 177.48 +0.45 +0.25%

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The deal comes a few weeks after J&J said it topped third-quarter expectations, thanks to growth from its largest segment, pharmaceuticals. Sales climbed 2% in the company’s medical device segment, to $6.78 billion.

The Associated Press contributed to this article.