As of Tuesday, the pharmaceutical giant Johnson & Johnson (J&J) confirmed its plans to acquire the medical device company, Abiomed, for $16.6 billion, marking the largest medical technology transaction of the year. J & J have agreed to pay $380 per share and have promised, through a contingent value right, an additional $35 per share if “certain commercial and clinical milestones are met”.
The acquisition received approval across all boards of directors and is anticipated to strengthen both company’s positions in the consumer health industry. The acquisition is expected to play a key role in the company’s corporate spin off, as J&J continue to strive towards the provision of more consumer-centric health services in addition to their manufacturing of pharmaceuticals and medical devices. The addition of Abiomed’s state of the art hemodynamic heart support technology will thus complement J&J’s medical device portfolio as J&J accumulates more scale .
Johnson & Johnson have a commercial history of acquiring much smaller businesses which mostly specialise in biotechnology as well as media technology. The company’s new CEO, Joquin Duato however has adopted a much more aggressive approach to deal making, centring on acquisitions of significantly larger targets within high-growth segments. The transaction thus marks the company’s most significant acquisition since the company’s $30 billion acquisition of Actelion in 2017
Abiomed has already experienced an increase in share price, as their share price premium rises to 51% compared to last Monday’s market close. As for Johnson & Johnson, the deal will enable them to solidify their position in the consumer health market whilst benefiting from the additional customers and revenue provided by Abiomed.
Written by: Nathan Pearman
Source: Biopharma Dive
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