Johnson & Johnson agreed to acquire Abiomed for $380 per share in cash, corresponding to an enterprise value of $16.6 billion and a more than 50% premium on the share price as of the market close on Oct. 31. Abiomed shareholders will also receive a contingent value right that entitles them to $35 per share in cash, if certain milestones are met. That would bring the premium to 60%.
The deal, which was unanimously approved by both boards, is expected to close in the first quarter of next year.
Last year, Johnson & Johnson announced it was splitting off its consumer health care business as a separate company to focus more on medical devices. This deal supports that strategy. The consumer health spinoff should be completed by November 2023.
“The deal is consistent with JNJ’s strategy of accelerating sales growth and expanding into higher growth segments,” said Larry Biegelsen of Wells Fargo Equity Research. “Management has expressed interest in broadening the cardiovascular franchise beyond the current electrophysiology business. In fact, we could see JNJ leveraging the new ABMD platform to add additional organic and/or inorganic products in the cardiovascular space.”
Danvers, Mass.-based Abiomed makes the Impella heart pumps which are used in patients with severe coronary artery disease. Abiomed reported last week that the FDA accepted and closed the post-approval study reports related to the device’s premarket approvals, a vote of confidence in Impella’s safety and efficacy in cardiogenic shock, high-risk PCI, post-cardiotomy cardiogenic shock, cardiogenic shock in the setting of myocarditis or cardiomyopathy and right heart failure. The company also has an extensive pipeline in the cardiovascular segment.
“We are pleased to have reached an agreement that reflects the remarkable value Abiomed created with our revolutionary Impella heart pump platform and promising pipeline,” said Michael Minogue, Abiomed’s chairman, president and CEO. “This transaction partners us with an organization that shares our patients-first mindset and creates immediate value for our patients, customers, employees and shareholders. It will enable us to leverage Johnson & Johnson’s global scale, commercial strength and clinical expertise to accelerate our mission of making heart recovery the global standard of care.”
“One of my priorities for the new Johnson & Johnson is to drive med tech to become a best-in-class performer,” said Johnson & Johnson CEO Joaquin Duato on a conference call following the deal’s announcement. “This acquisition is consistent with that strategy, expanding J&J medtech into high-growth markets and accelerating revenue growth while advancing the standard of care.”
“The addition of Abiomed provides a strategic platform to advance breakthrough treatments in cardiovascular disease and helps more patients around the world while driving value for our shareholders,” said Duato.