Finger On The Pulse

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What's going on?

Healthcare giant Johnson & Johnson (J&J) announced on Tuesday that its buying heart device maker Abiomed.

What does this mean?

J&J announced plans to spin off its consumer goods division at the end of last year, going all-in on its other business areas instead. And now that its buying Abiomed in a deal worth around $17 billion, it seems to be putting its money where its mouth is. This deal set to be J&Js biggest in nearly six years will cost a pretty penny: the healthcare titans shelling out 51% more than Abiomeds shares were worth before the deal was announced. For J&J, it seems to be a case of you get what you pay for: this deal will let it get its mitts on Abiomeds renowned Impella heart pumps for patients with severe heart disease, famed for being the smallest in the world, and inject its medical device segment with the tidy $1 billion a year that Abiomed currently brings in.

Why should I care?

For markets: Hearts in the right place.
2022s been a slow year for mergers and acquisitions, but this bumper deal bucks the trend. After all, J&Js flush with cash from vaccine sales right now, so it can afford to snap up firms while valuations are low. And this isnt just a smart short-term grab: heart disease is already one of the worlds leading causes of death, and with a growing population, demand for Abiomeds devices is only likely to increase.

The bigger picture: Viva diversification.
J&Js scouting out new opportunities as Covid slips away, and there are signs competitors are following suit. Rival medical goliath Pfizer reported impressive results on Tuesday, but with vaccine demand slowing outside the US, its certainly not putting all its eggs in one basket: it just announced plans to launch 19 new products over the next 18 months.

Originally posted as part of the Finimize daily email.

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