April 18, 2024 | Health Care | North America | Active

Shockwave / Johnson & Johnson: Deal Insight

On 5-Apr-24, US pharmaceutical and medical device giant Johnson & Johnson (J&J) entered into a definitive agreement to acquire Shockwave Medical for $13.1bn, or $335 per share. This cash offer represents a 17% premium over Shockwave’s closing price on 25-Mar-24, prior to media reports on a potential deal. Shockwave cannot distribute dividends without prior written consent from J&J, with specific exceptions. The acquisition has been approved by the boards of both companies and, following completion, Shockwave will operate as a business unit within J&J MedTech’s cardiovascular portfolio. J&J plans to finance the transaction using a combination of its available cash and borrowing. The takeover requires approval from Shockwave shareholders (50%), but a J&J shareholder vote is not required. The merger agreement contains customary clauses on representations, warranties, covenants, and MAC, and Shockwave is bound by a non-solicitation clause with customary fiduciary-out exemptions. The deal is subject to regulatory approvals, including HSR and undisclosed foreign regulatory approvals. Clauses on reasonable best efforts read customary, while there is a burdensome condition that restricts divestments or remedies that would “reasonably be expected to (i) be material to the business, assets or financial condition of the company and its subsidiaries, taken as a whole, or (ii) be materially detrimental to the benefits parent and its affiliates expect as a result of the merger.” The termination fee is $448m, and there is no RTF. The preliminary proxy and regulatory filings are both expected to be filed within 10 business days, by 18-Apr-24. The companies expect the deal to close by mid-2024, against a long-stop date of 4-Jan-25, which can be extended until 7-Jul-25 if regulatory approvals remain pending. Deal Rationale Santa Clara, California-based Shockwave specialises in providing a minimally invasive, catheter-based treatment known as innovative intravascular lithotripsy, or IVL, which targets ...

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