Johnson & Johnson (JNJ.N) on Friday agreed to buy Shockwave Medical (SWAV.O) for $12.5 billion, in a deal that would help broaden its portfolio of medical devices used in treating heart diseases.
The acquisition gives J&J access to a device that uses shockwaves to break down calcified plaque in heart vessels, similar to how kidney stones are treated, with RBC analysts estimating the total addressable market for similar therapies at about $10 billion.
J&J's spate of deals in recent years to bolster other parts of its business comes as its blockbuster Crohn's disease drug, Stelara, faces fresh rivals in the United States next year.
The company is focusing on building its cardiac health division and spent $16.6 billion to buy heart pump maker Abiomed in 2022 and $400 million to buy another heart-centric device maker Laminar.
With the latest deal, J&J is entering an "opportunistic space," CRISPIdea analyst Shejal Ajmera said. "I would certainly like to see how aggressively they will be turning this into a revenue source."
J&J has offered $335 per share in cash, which represents a 17% premium to the stock's closing price in late March, when the Wall Street Journal reported J&J's interest in Shockwave. Shockwave shares rose nearly 2% to $325.50 in early trading.
The conglomerate said the enterprise value of the deal, including cash acquired, was about $13.1 billion. Reuters' calculation of the deal value is based on the device maker's outstanding share count of 37.40 million, according to LSEG data.
Shockwave's catheter-based treatment known as intravascular lithotripsy (IVL) is used, often in combination with stents, to treat two heart conditions in which arteries get clogged with calcium deposits.
Shockwave posted product sales of $730.2 million last year.
J&J expects to finance the deal through a combination of cash on hand and debt.
J.P. Morgan Securities LLC is J&J's financial adviser, while Perella Weinberg Partners is advising Shockwave.
