Johnson & Johnson will buy cardiovascular technology company Abiomed for $16.6 billion to strengthen its medical device division.
The healthcare giant said Tuesday that it will pay $380 per share of Abiomed and provide $35 per share in cash if certain commercial and clinical milestones are met.
Abiomed develops technologies to treat coronary artery disease and heart failure. This includes the Impella heart pump for patients with severe coronary artery disease.
J&J said the deal, expected to close early next year, will help the company build out its medical device division by entering high-growth businesses.
J&J announced nearly a year ago that by breaking up its consumer health unit, which sells Band-Aids and beauty products, it would shift its focus more toward medical devices and its biggest business, pharmaceuticals.
With Abiomed, J&J is adding an explosive growth company to its portfolio. Sales in the most recent fiscal year rose 22 percent to more than $1 billion. That’s more than triple annual sales five years ago.
Following the transaction, Abiomed will operate as an independent business within Johnson & Johnson’s Medical Devices division.
Johnson & Johnson will pay for the acquisition through 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 closing, before helping it become profitable starting in 2024.
Shares of Johnson & Johnson, based in New Brunswick, New Jersey, fell about 1 percent to $172.11 before the market opened on Tuesday. Shares of Danvers, Mass.-based Abiomed Inc. surged nearly 51% to $380.42.