J&J to buy cardio technology company Abiomed for $16.6 billion

Johnson & Johnson will spend $16.6 billion to buy cardiovascular technology company Abiomed to strengthen its medical device division.

The health care giant said today that it will pay $380 for each Abiomed share and also provide another $35 per share in cash if some commercial and clinical milestones are met.

Abiomed develops technology that treats coronary artery disease and heart failure. That includes Impella heart pumps, which are used for patients with severe coronary artery disease.

J&J says the deal, which is expected to close early next year, will help the company build its medical device segment by entering a high-growth business.

J&J announced nearly a year ago, that it was turning its focus more to medical devices and its largest business, pharmaceuticals, by splitting off its consumer health division that sells Band Aids and beauty products.

With Abiomed, J&J is adding to its portfolio a company with explosive growth. Sales jumped 22% to exceed $1 billion in its most recent fiscal year. That is well over twice the annual sales it booked just five years ago.

Abiomed will run as a standalone business within J&J’s medical device segment once the deal is completed.

J&J will pay for the acquisition with a combination of cash and short-term financing. The company expects the deal to be neutral or slightly dilutive to adjusted earnings in the first year after its completion and then will start helping its bottom line in 2024.

Shares of Johnson & Johnson, based in New Brunswick, N.J., slipped about 1% to $172.11 in before the opening bell today. Shares of Abiomed Inc., Danvers, Mass., soared nearly 51%, to $380.42.