Johnson & Johnson to buy Shockwave Medical for $12.5 billion

Shockwave Medical Inc (NASDAQ: SWAV) is in the green today after Johnson & Johnson (NYSE: JNJ) said it will buy the medical device maker for $12.5 billion.

Shockwave Medical stock priced at a premium

The all-cash agreement values each share of Shockwave Medical at $335 – a 5.0% premium on their previous close.

JNJ expects the acquisition to help it further expand its footprint in cardiovascular interventions. Joaquin Duato – its chief executive said in a press release today:

The announcement arrives only days before Johnson & Johnson is scheduled to report its quarterly financial results. Consensus is for it to earn $2.63 a share versus $2.68 per share a year ago.

$SWAV will be accretive to JNJ margin

JNJ expects to close this transaction in the second quarter of 2024 provided that it satisfies customary closing conditions including regulatory and shareholders’ approval.

Note that Shockwave Medical will delist from Nasdaq once this agreement is complete. Johnson & Johnson is confident that $SWAV will help boost sales and be accretive to its operating margin upon closing.

Also today, the multinational pharmaceutical behemoth based out of New Brunswick, New Jersey recommended its shareholders to reject TRC Capital’s unsolicited mini-tender offer.

Wall Street currently has a consensus “overweight” rating on $JNJ that pays a dividend yield of 3.12% at writing.