Johnson & Johnson (NYSE:JNJ) said on Tuesday it would buy heart pump maker Abiomed (NASDAQ:ABMD) in a $16.6-billion deal, its biggest in nearly six years, as the conglomerate seeks to boost its cardiovascular business.
The deal comes when J&J is spinning off its consumer health business to focus on its pharmaceuticals and medical devices operations.
Joaquin Duato, who took over as CEO in January, has said his priority was to be “more on the acquisitive side” for the medical devices unit, its second-largest business by revenue.
J&J’s offer of upfront payment of $380 per share represents a 50.7% premium to Abiomed’s last closing price.
Abiomed shareholders will also get rights to receive up to $35 per share in cash if certain commercial and clinical milestones are achieved.
Abiomed, which generated revenue of $1.03 billion in fiscal year 2022, develops medical technology that provides circulatory and oxygenation support.
Founded in 1981, the company’s Impella heart pumps are the smallest in the world and have been used in the United States since 2008. Impella’s worldwide revenue totaled $985 million in fiscal year 2022.
J&J said Abiomed will operate as a standalone business within the conglomerate’s medical technology division.
The company’s medical technology business comprises surgical, orthopedic and various other devices. The unit generated over $20 billion in sales in the first nine months of the year.
JNJ shares backpedaled 31 cents, to $173.66, in the first hour on Tuesday, while ABMD boomed $128.09, or 50.8%, to $380.17.
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