Johnson & Johnson announces $13.1bn acquisition of Shockwave Medical to strengthen medtech division

In a monumental move within the medical technology sector, Johnson & Johnson (NYSE: JNJ) has announced its acquisition of Shockwave Medical, Inc. (Nasdaq: SWAV) for a staggering $335.00 per share in cash. This acquisition, translating to an enterprise value of approximately $13.1 billion, marks a significant expansion of Johnson & Johnson’s MedTech division, specifically within the cardiovascular intervention arena. The merger, receiving approval from both companies’ boards of directors, is poised to position Johnson & Johnson at the forefront of one of the fastest-growing global medtech markets.

Shockwave Medical, renowned for its innovative intravascular lithotripsy (IVL) technology, addresses critical unmet needs in treating calcified coronary artery disease (CAD) and peripheral artery disease (PAD). This acquisition enables Johnson & Johnson to extend its MedTech cardiovascular portfolio into these high-growth segments, building on the success of its previous acquisitions, including heart recovery leader Abiomed and atrial fibrillation innovator Laminar.

Joaquin Duato, Chairman and CEO of Johnson & Johnson, emphasized the strategic significance of the acquisition, stating, “With our focus on Innovative Medicine and MedTech, Johnson & Johnson has a long history of tackling cardiovascular disease – the leading cause of death globally. The acquisition of Shockwave and its leading IVL technology provides a unique opportunity to accelerate our impact in cardiovascular intervention and drive greater value for patients, shareholders and health systems.”

The transaction is expected to solidify Johnson & Johnson MedTech’s leadership by integrating Shockwave’s first-to-market IVL platform, the only commercially available technology of its kind for CAD and PAD. This merger complements Johnson & Johnson’s already strong positions in heart recovery and electrophysiology, aiming to make it a category leader across four high-growth cardiovascular segments.

From an operational standpoint, the acquisition is anticipated to be accretive to Johnson & Johnson’s operating margin, with an expected operational accretion upon closing. However, the impact of financing costs may dilute adjusted earnings per share slightly in the immediate years following the acquisition.

The strategic benefits of this acquisition extend beyond immediate financial accretion, highlighting a complementary fit between Shockwave’s IVL technology and Johnson & Johnson’s existing portfolio. This merger is expected to accelerate the adoption of leading-edge cardiovascular technologies globally, addressing a vast unmet patient need.

The transaction’s closure, anticipated by mid-year 2024, is contingent upon customary closing conditions, including Shockwave shareholder approval and regulatory approvals. Upon completion, Shockwave will operate as a business unit within Johnson & Johnson MedTech, with its financials reported within the Cardiovascular portfolio.

The acquisition of Shockwave Medical by Johnson & Johnson marks a watershed moment in the medical technology industry, particularly in the field of cardiovascular intervention. It signifies a deliberate shift towards embracing innovative technologies that promise to transform patient care. By leveraging Shockwave’s pioneering IVL technology, Johnson & Johnson not only enhances its product portfolio but also underscores its commitment to leading the charge in medtech innovation. This merger is a clear indication of the industry’s direction, where strategic acquisitions pave the way for accelerated growth and expanded global reach in high-demand medical sectors.