Johnson & Johnson Could Level Up With Its $16.8 Billion Purchase of Abiomed
Healthcare conglomerate Johnson & Johnson (NYSE: JNJ) recently made headlines by announcing it will acquire medical device company Abiomed for $16.6 billion in an all-cash transaction. The buyout offer was roughly a 50% premium to where shares of Abiomed traded at the time of the announcement, signaling Johnson & Johnson's desire to make the deal happen.
So what is Johnson & Johnson getting for its money? Or, more importantly, what are investors getting? Few companies have the financial firepower Johnson & Johnson has, so I'll break down the acquisition's financial impact and whether Abiomed will make its new parent company a better investment for long-term investors.
Significant acquisitions can be a huge gamble. Sometimes they can blow up in a company's face, mainly when debt funds the transaction. Just look at tobacco company Altria, which doubled the debt on its books by buying Juul, a move that was a complete failure. Fortunately, Johnson & Johnson is a much stronger company financially.
Source Fool.com
