On April 5, 2024, Johnson & Johnson NYSE: JNJ introduced its intent to amass Shockwave Medical Inc. NASDAQ: SWAV for $13.1 billion. Below the terms of the proposed deal, JNJ pays $335 per share, which is a 4.75% premium in comparison with Shockwave’s closing value on April 4, 2024. As of mid-day buying and selling on April 8, 2024, JNJ inventory is flat, and SWAV inventory is up roughly 1.8%. 

The deal, which the corporate says will likely be financed with money and debt, enhances JNJ’s place within the quickly rising cardiovascular intervention market. The $13.1 billion acquisition is simply about 3.5% of the corporate’s market cap. That enables buyers to give attention to the upside, of which there seems to be loads for buyers to think about.

One of many prizes for Shockwave Medical is its first-to-market intravascular lithotripsy technology. Lithotripsy know-how is usually used to interrupt up kidney stones, that are shaped by calcium buildup. Shockwave’s method is “a catheter-based remedy for calcified arterial lesions, which may scale back blood move and trigger ache or coronary heart assaults.”  

The deal will improve Johson & Johnson’s management place within the MedTech sector. Johnson & Johnson CEO Joaquin Duato remarked, “With our give attention to Revolutionary Medication and MedTech, Johnson & Johnson has a protracted historical past of tackling heart problems – the main reason behind loss of life globally. The acquisition of Shockwave and its main IVL know-how supplies a novel alternative to speed up our impression in cardiovascular intervention and drive higher worth for sufferers, shareholders and well being programs.” 

Will This Deal Be the Jolt JNJ Inventory Wants? 

In the event you take a look at the JNJ inventory value over any size of time, you see a constant transfer greater. The corporate is thought for delivering long-term value for shareholders by means of over 60 consecutive years of dividend progress and returning over 60% of its free money move to shareholders within the final 5 years.  

Nonetheless, within the final 5 years, the inventory is up simply 11.87%. That is over 10% decrease than the S&P 500 average of 14.3% per year over the identical interval.  

And, since August 2023, the inventory has been in a steady downtrend. JNJ inventory is down 7.88% within the final 12 months and a pair of.93% by means of the primary three months of 2024. Each numbers are far under the typical of pharmaceutical shares.  

Throughout this time, Johnson & Johnson has been embroiled in a number of lawsuits. And in 2023, the pharmaceutical firm spun off Kenvue Inc. NYSE: KVUE. Initially, JNJ inventory received a lift from the spinoff however has since been buying and selling in a variety.  

Nonetheless, The weak efficiency could say much less about Johnson & Johnson and extra about corporations like Novo Nordisk A/S NYSE: NVO and Eli Lilly & Co. NYSE: LLY, drawing investor consideration attributable to their GLP-1 weight reduction remedies. Different corporations are making sturdy inroads into the oncology market.  

As buyers know, the pharmaceutical business is a what-have-you-done-for-me-lately enterprise. The acquisition of Shockwave, if accepted by Shockwave shareholders, will give buyers extra worth for his or her shares. Traders ought to anticipate extra data when Johnson & Johnson studies earnings on April 16, 2024.  

Earlier than you contemplate Johnson & Johnson, you will wish to hear this.