J&J Preps for Consumer Health Spin-Off, Purchases Abiomed for $16.6B

Pharmaceutical company Johnson & Johnson struck a deal Tuesday to acquire Abiomed, the heart pump manufacturer. J&J will pay $16.6 billion in cash for the acquisition, valuing the stock at $380 per share, a 50% bump compared to the company’s stock price at the time of the announcement.  

Johnson and Johnson will fund the transaction with a combination of cash-on-hand and short-term financing.

Abiomed specializes in organ support systems, including their line of Impella heart pumps and the cardiopulmonary OXY-1 system. The Impella pump is the smallest heart pump currently on the market, and it can be paired with an intelligent pump management system that allows providers to react to metrics and manipulate the pump without imaging guidance. The company is expected to remain a standalone business, joining J&J’s larger group of subsidiary medical technology companies.

J&J CEO Joaquin Duato explained that the decision to bring Abiomed into the fold supports the organization’s goal of expanding its medical technology offerings. "One of my priorities for the new Johnson & Johnson is to drive medtech to become a best-in-class performer," Duato said in an announcement accompanying the deal. “We have committed to enhancing our position in medtech by entering high-growth segments. The addition of Abiomed provides a strategic platform to advance breakthrough treatments in cardiovascular disease and helps more patients around the world while driving value for our shareholders.”

Duato took over for long-time CEO Alex Gorsky in 2021 and immediately made it his mission to guide the spin-off of J&J’s consumer health company, which will be called Kenvue. 

In September of this year, Duato commented on the split: “Kenvue is poised to thrive as a standalone company with a leading portfolio of brands consumers love and trust. I’m confident in this team and excited to see what the future holds.” The decision reflects similar choices made by Merck & Co and Pfizer, which chose to separate consumer health products from their primary business.

That division of J&J’s business has been hit with numerous lawsuits after it was found that the use of talc-based baby powder sold by the company had contributed to cancers in women. The full legal ramifications of these lawsuits have not been decided as J&J works to stall the proceedings.

Johnson & Johnson chose the former head of its consumer health division, Thibaut Mongon, to lead the Kenvue spinoff as its chief executive. The leadership transition and separation of businesses will likely come early in 2023.