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Johnson & Johnson to acquire Abiomed, a company that helps your heart pump blood

This will be the largest MedTech and BioTech transaction of 2022.

Johnson & Johnson (J&J), one of the world’s largest producers of medical devices, announced it will acquire Abiomed Inc. for around $17.3 billion in cash and will pay $380 for each Abiomed share, a 50.7 per cent premium over its closing price of $252.08, whilst also promising an additional $35 per share in cash if certain commercial and clinical milestones are achieved. Johnson & Johnson is advised by J.P. Morgan and Cravath, Swaine & Moore LLP, whilst Abiomed (led by Michael Minogue) is advised by Goldman Sachs and Sullivan & Cromwell LLP.

Who is Abiomed?

Founded in 1981, Abiomed is a leading, first-to-market provider of medical technology that treats coronary artery disease and heart failure; one of the fastest-growing MedTech segments. Most of their revenue comes from the sale of Impella heart pumps; small devices that are threaded through arteries into the heart to help it move blood through the body when a patient’s heart isn’t pumping enough blood to oxygenate the body. Impella’s worldwide revenue totalled $985 million in the year 2022. 

What does this acquisition mean?

Cardiovascular disease is the number one cause of death in the world, and in the USA alone it accounts for nearly 700,000 deaths in 2020, coming up to a rate of one death almost every 34 seconds. J&J executives believe that they can leverage their existing infrastructure and expand Abiomed’s reach beyond the USA, in hopes of improving the global standard of care for cardiovascular problems, helping more patients around the world, and enhancing J&J’s position in MedTech which ultimately drives value for shareholders. 

Following J&J’s announcement on the splitting of its consumer health division in 2021, Abiomed will operate as a standalone business within J&J’s medical technology business once the deal is completed. The healthcare giant does not plan to make heavy workforce reduction at Abiomed, claiming that expected synergies from the deal would be “relatively modest” and moreover, the deal which is expected to close before Q2 2023, will only start contributing to adjusted earnings from 2024, said Duato, new CEO of J&J. 

Analyst: Arif Muhammad

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