By Bhanvi Satija and Sriparna Roy
(Reuters) -Johnson & Johnson on Friday agreed to buy Shockwave Medical (NASDAQ:SWAV) in a deal valued at $13.1 billion including debt, as it builds its cardiac-health-centric medical devices business to help drive growth.
J&J (NYSE:JNJ) has offered $335 per share in cash that values the equity portion at $12.5 billion, based on Reuters' calculations. The offer also represents a 17% premium to the stock's closing price in late March, when the Wall Street Journal reported J&J's interest in Shockwave, whose shares were currently trading at $326.82.
The acquisition gives J&J access to a device that uses shockwaves to break down calcified plaque in heart vessels, similar to how kidney stones are treated. RBC analysts estimate the total addressable market for similar therapies at about $10 billion.
It is also the latest in a string of takeovers that focuses on building its cardiac health division - after a $16.6 billion deal to buy heart pump maker Abiomed (NASDAQ:ABMD) in 2022 and a $400 million bid for heart-centric device maker Laminar.
"Shockwave checks all the boxes" from an M&A perspective, J&J CEO Joaquin Duato said on a conference call. J&J reiterated that it would focus on deals that add value to its cardiovascular product portfolio.
J&J is trying to bolster its medical devices business as it gears up to face fresh U.S. competition for its blockbuster Crohn's disease drug, Stelara, from next year.
With the latest deal, J&J is entering an "opportunistic space," CRISPidea analyst Shejal Ajmera said. "I would certainly like to see how aggressively they will be turning this into a revenue source.
Shockwave's catheter-based treatment known as intravascular lithotripsy (IVL) is used, often in combination with stents, to treat two common heart conditions.
Shockwave posted product sales of $730.2 million last year.
J&J expects to finance the deal through a combination of cash on hand and debt. It expects that the deal will reduce its adjusted earnings per share by 10 cents this year.