Shares of Abiomed (ABMD 49.88%) soared 50% on Tuesday after the medical device maker reached an acquisition agreement with Johnson & Johnson (JNJ -0.51%).
J&J will make a tender offer for the publicly traded shares of Abiomed. Under the terms of the agreement, Abiomed shareholders would receive $380 per share in cash, representing an enterprise value of approximately $16.6 billion.
Abiomed shareholders will also earn an additional $35 per share in cash if certain sales and development milestones are reached.
The transaction is expected to close in the first quarter of 2023, subject to regulatory approvals.
The purchase of Abiomed would give J&J ownership of the popular Impella heart pump. The device has received US Food and Drug Administration (FDA) approval for use in patients with severe coronary heart disease, the number one cause of death worldwide.
“We are delighted to have entered into an agreement that reflects the remarkable value created by Abiomed with our breakthrough Impella heart pump platform and promising pipeline,” Abiomed CEO Michael Minogue said in a press release.
Under the J&J umbrella, Abiomed would benefit from greater advantages of scale, as well as clinical and commercial expertise, according to Minogue. This should help accelerate Abiomed’s growth, particularly in international markets.
The deal aims to bolster J&J’s medtech business ahead of the next spin-off from its consumer healthcare business in late 2023. Abiomed could add a strong element of growth to the healthcare giant’s portfolio. The device maker has posted seven straight quarters of double-digit sales growth.
J&J expects the Abiomed acquisition to add to its adjusted earnings per share from 2024.
Joe Tenebruso has no position in the stocks mentioned. The Motley Fool fills positions and recommends Abiomed. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
. Why Abiomed Stock climbed arrow today