Johnson & Johnson snagged Shockwave Medical in a $13.1 billion deal that the Dow Jones giant says will accelerate its shift into higher-growth markets.
Shockwave uses intravascular lithotripsy, or IVL, to crack calcifications in the arteries. This allows the blood to flow easier, reducing pain and the risk of heart attacks. Traditionally, patients undergo atherectomy, which uses a small drill to dig through the calcifications. But this can lead to embolic debris flowing downstream and clogging the arteries again.
IVL "doesn't disrupt the calcium to a degree it's liberated," Shockwave Chief Executive Doug Godshall said in a 2022 interview. "The vessel expands dramatically."
Shockwave stock has surged 71% year to date, as of Friday's close, with takeover speculation as one of the driving forces. Last year, rumors suggested Boston Scientific could buy it. On today's stock market, Shockwave Medical shares rose 2% to 326.34, while J&J stock fell a fraction to 152.39.
Shockwave Medical: An Expert In Cardiovascular Tech
The deal values Shockwave stock at $335 per share and is expected to close in mid-2024.
Johnson & Johnson says the transaction will be slightly dilutive to its adjusted earnings this year and next.
Adding Shockwave Medical will further expand J&J medtech's expertise in cardiovascular intervention. Needham analyst Mike Matson notes J&J previously bought Abiomed and Laminar. Abiomed makes implantable circulatory support devices. Laminar makes a device that treats a heart condition, lowering the risk of stroke.
"We believe that the J&J offer fairly values Shockwave, do not expect any antitrust issues due to a lack of product overlap and think that a higher bid is unlikely," he said in a report.
He downgraded Shockwave stock to a hold rating from buy.
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