J&J To Buy Shockwave For $13 Billion In Medical Device Play

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(Bloomberg) -- Johnson & Johnson agreed to acquire Shockwave Medical Inc. for about $13.1 billion to bolster its expansion into making medical devices to treat heart disease.

J&J will pay $335 a share in cash for Santa Clara, California-based Shockwave, the companies said Friday in a statement. The equity value of the deal is about $12.5 billion, or $13.1 billion including enterprise value and cash acquired. The transaction is expected to close by mid-year.

Since moving to separate from its consumer health division, J&J has been building strength in medical technology with acquisitions including Abiomed, a maker of heart-assist devices, and Laminar, which is developing technology to treat atrial fibrillation. Acquiring Shockwave will make the health-care giant a leader in four quickly growing cardiovascular technology categories, according to the statement.

The new addition brings Shockwave's technology, called intravascular lithotripsy, which uses sound waves to break up calcification in heart vessels and the peripheral circulation. Shockwave says the system is safer than other treatment approaches.

“The deal gives JNJ a new cardiology platform and technology aimed at the cath-lab which has been lacking to some extent vs. peers,” Mizuho's Jared Holz said in a note to clients.

Shockwave has been the subject of takeover speculation for some time, with companies including Boston Scientific Corp. showing interest. Shockwave shares rose as much as 1.7% at the New York market open after gaining 68% on the year through Thursday's close. Shares in J&J fell less than 1%.

J&J said it will fund the deal with cash on hand and debt. It's expected to dilute J&J's shares by about 10 cents on an adjusted basis in 2024 and by 17 cents next year, and includes a termination fee of $448 million.

J&J has been rapidly building its portfolio in both medical technology and drug development to help prepare for the impending loss of exclusivity for Stelara, its top-selling drug for psoriasis, in the US next year. In January, the company agreed to pay about $2 billion for Ambrx Biopharma Inc. to gain antibody-drug conjugates — therapies that deliver high doses directly to tumors while minimizing damage to surrounding tissues.

JPMorgan Securities LLC is serving as financial adviser to J&J on the deal and Perella Weinberg Partners is advising Shockwave.

--With assistance from Gerry Smith.

(Updates with analyst comment and share moves from the fifth paragraph.)

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