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 can pay $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 just about 3.5% of the corporate’s market cap. That enables buyers to deal with the upside, of which there seems to be a lot for buyers to contemplate.

One of many prizes for Shockwave Medical is its first-to-market intravascular lithotripsy technology. Lithotripsy expertise is often used to interrupt up kidney stones, that are shaped by calcium buildup. Shockwave’s strategy is “a catheter-based therapy for calcified arterial lesions, which might scale back blood circulate 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 deal with Progressive Drugs and MedTech, Johnson & Johnson has a protracted historical past of tackling heart problems – the main explanation for loss of life globally. The acquisition of Shockwave and its main IVL expertise gives a singular alternative to speed up our affect in cardiovascular intervention and drive better worth for sufferers, shareholders and well being techniques.” 

Will This Deal Be the Jolt JNJ Inventory Wants? 

In the event you have a look at the JNJ inventory value over any size of time, you see a constant transfer greater. The corporate is understood 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 circulate to shareholders within the final 5 years.  

Nevertheless, 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 common 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 obtained a lift from the spinoff however has since been buying and selling in a variety.  

Nevertheless, The weak efficiency might 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 resulting from 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 look forward to extra data when Johnson & Johnson studies earnings on April 16, 2024.  

Earlier than you take into account Johnson & Johnson, you will wish to hear this.