MERGERS & ACQUISITIONS

Johnson & Johnson is planning to purchase Abiomed Inc for approximately $17.3bn, or $380 per share. Shareholders are also in line to receive an additional $35 per share if certain goals are accomplished. The acquisition of Abiomed is intended to build on J&J’s technology, which assists heart function.

J&J is hoping to focus on gaining higher returns from its medical and pharmaceutical technology divisions, while Abiomed has been focusing on Impella heart pumps ‒ the sale of which makes almost all of its profits.

Impella pumps are small devices that are implanted through the arteries into the heart, helping it to continue to move blood throughout the patient’s body. They increase the rate of blood flow, or can be used for patients undergoing high-risk surgeries, ensuring that the heart remains functioning throughout the surgery.

Marie Thibault, an analyst at BTIG, noted that Abiomed has a “monopoly position in mechanical circulatory support, an extensive product pipeline, and was expected to return to mid-teens revenue growth in the outyears.”

 If Abiomed were to accept an alternative offer or terminate its merger agreement, it would have to pay J&J $550m, although Thibault notes that it is highly unlikely that another offer will arise given the premium J&J is offering. At the end of September, Abiomed had zero debt and $937m, and its sale price to J&J relates to its cash value of around $16.6bn. The acquisition is expected to take place by the end of March 2023.