SU J&J Acquisition of Abiomed Case Report
Description
create a case report about how the company Johnson & Johnson acquired Abiomed.
I am providing an important powerpoint presentation that will help inform your case report. The powerpoint is split into 3 parts, which fall into sequence (first part 1, then 2 and then 3) Soon enough I may provide more materials to help but feel free to do other research on these companies and the acquisition.
You can do a SWOT (strengths, weaknesses,opportunities, threats), dividend discount model, price multiples, 2 step model, whatever works to create the report. The powerpoint should help in this regard.
I would also ask that you create an Excel file which fully details any calculations done. This is required.
Unformatted Attachment Preview
SUFFOLK UNIVERSITY
Case Presentation:
Darpan Saluja
Shehryar Arif
Valentin Egozaryan
Introduction – Johnson &
Johnson
?
The American global firm Johnson & Johnson (J&J), established in
1886
?
Creates consumer packaged goods, pharmaceuticals, and medical
equipment
?
The company is rated No. 36 on the 2021 Fortune 500 list of the
largest American corporations by total revenue, and its common
stock is a component of the Dow Jones Industrial Average
?
The corporation has about 250 subsidiary businesses that operate in
60 countries and sell their goods in more than 175 nations
?
During the 2021 calendar year, Johnson & Johnson generated $93.8
billion in global revenues
Introduction – Abiomed
?
Developing and producing temporary external and
implanted mechanical circulatory support devices
?
Bloomberg reports that the company “focuses on the
design, development, and marketing of medical devices
that help or replace a failing heart’s pumping action.
Additionally, it offers patients with heart failure a
continuum of care ”
?
The company had 1,408 patents that were either issued
or pending as of 2022, along with five FDA approvals.
?
Abiomed announced $1.032 billion in revenue for the
fiscal year 2022 and diluted earnings per share of $2.98.
What Happened?
Johnson & Johnson announced its largest transaction in over
six years: a $16.6 billion acquisition of heart pump
manufacturer Abiomed. The $380 upfront payment from J&J
represents a 50.7% premium over Abiomed most recent
closing price.
Industry Overview of
Abiomed
The market for medical devices includes implants,
tools, and equipment used for treatment, observation,
and diagnosis. Implantable cardiac and diabetes
monitoring are among them, as well as reconstructive
equipment like hip and knee replacements.
Sectors:
? Orthopedics
? Cardiovascular Devices
? Other segments
Technologies and Processes
? 3D Imaging
? Lasers
? Machining
? Materials
SWOT Analysis for
Abiomed inc.
Strengths
?
Product Innovation
?
Competent Staff
?
Integrated number of Technology
?
Excellent Performance
?
Strong Returns
Weakness
?
Investment in R&D
?
High Employment Turnover
?
Lacking Items
Opportunities
?
New Technology
?
Government Green Initiatives
?
Online Channel
?
Decreasing Transportation Cost
Threats
?
Supply Chain
?
International Operations
?
Trend of Isolationism
?
Product Risk
?
Margin Risk
ESG Scores
Dividend Discount Model
? LTG = 3.14%
? Average Payout = 44%
? Price Computed/share = 164
?
Implied Rate = 6%
Price Multiples
? LT Price/Earnings = 23.1x
? LT Price/Book Value = 6.1x
? LT Price/Cash Flow = 20.2x
? LT Price to Sales = 5.1x
Overall = ?
2 STEP Model
? Terminal G = 3.14%
? Current Stock Price(Dec 1st 2022) = 178.550
? Target Price(w.r.t DCF) = 185
? Recommendation: BUY
Assumptions and Methods
? All assets, liabilities, revenues and expenses were combined.
? Dividends received would reduce the investment account
? Equity method of accounting was followed
? The long-term growth rate is slightly higher than the approximate 3% growth
rate of the US economy.
Conclusions
?
?
?
?
?
?
?
Took measures to reduce the ESG risk score from high to medium
Risk Score = 25.02 (Source: Sustainanalytics)
Has 35.71% women on the board (Source: Sustainanalytics)
A strict Biodiversity and Human Rights Policy
Highest Market Cap among competitors of $427 billion
Potential for Growth
Evidence: One of the fastest developers of Covid-19 vaccines
Price Relative Valuation
In $Billions
? Johnson & Johnson 467.31
?
?
?
?
Bristol Myers Squibb 171.96
Eli Lilly and Company 351.88
Merck & Co
278.39
Pfizer
286.73
Thankyou!
Purchase answer to see full
attachment
Case Presentation:
Darpan Saluja
Shehryar Arif
Valentin Egozaryan
Introduction – Johnson &
Johnson
?
The American global firm Johnson & Johnson (J&J), established in
1886
?
Creates consumer packaged goods, pharmaceuticals, and medical
equipment
?
The company is rated No. 36 on the 2021 Fortune 500 list of the
largest American corporations by total revenue, and its common
stock is a component of the Dow Jones Industrial Average
?
The corporation has about 250 subsidiary businesses that operate in
60 countries and sell their goods in more than 175 nations
?
During the 2021 calendar year, Johnson & Johnson generated $93.8
billion in global revenues
Introduction – Abiomed
?
Developing and producing temporary external and
implanted mechanical circulatory support devices
?
Bloomberg reports that the company “focuses on the
design, development, and marketing of medical devices
that help or replace a failing heart’s pumping action.
Additionally, it offers patients with heart failure a
continuum of care ”
?
The company had 1,408 patents that were either issued
or pending as of 2022, along with five FDA approvals.
?
Abiomed announced $1.032 billion in revenue for the
fiscal year 2022 and diluted earnings per share of $2.98.
What Happened?
Johnson & Johnson announced its largest transaction in over
six years: a $16.6 billion acquisition of heart pump
manufacturer Abiomed. The $380 upfront payment from J&J
represents a 50.7% premium over Abiomed most recent
closing price.
Industry Overview of
Abiomed
The market for medical devices includes implants,
tools, and equipment used for treatment, observation,
and diagnosis. Implantable cardiac and diabetes
monitoring are among them, as well as reconstructive
equipment like hip and knee replacements.
Sectors:
? Orthopedics
? Cardiovascular Devices
? Other segments
Technologies and Processes
? 3D Imaging
? Lasers
? Machining
? Materials
SWOT Analysis for
Abiomed inc.
Strengths
?
Product Innovation
?
Competent Staff
?
Integrated number of Technology
?
Excellent Performance
?
Strong Returns
Weakness
?
Investment in R&D
?
High Employment Turnover
?
Lacking Items
Opportunities
?
New Technology
?
Government Green Initiatives
?
Online Channel
?
Decreasing Transportation Cost
Threats
?
Supply Chain
?
International Operations
?
Trend of Isolationism
?
Product Risk
?
Margin Risk
ESG Scores
Dividend Discount Model
? LTG = 3.14%
? Average Payout = 44%
? Price Computed/share = 164
?
Implied Rate = 6%
Price Multiples
? LT Price/Earnings = 23.1x
? LT Price/Book Value = 6.1x
? LT Price/Cash Flow = 20.2x
? LT Price to Sales = 5.1x
Overall = ?
2 STEP Model
? Terminal G = 3.14%
? Current Stock Price(Dec 1st 2022) = 178.550
? Target Price(w.r.t DCF) = 185
? Recommendation: BUY
Assumptions and Methods
? All assets, liabilities, revenues and expenses were combined.
? Dividends received would reduce the investment account
? Equity method of accounting was followed
? The long-term growth rate is slightly higher than the approximate 3% growth
rate of the US economy.
Conclusions
?
?
?
?
?
?
?
Took measures to reduce the ESG risk score from high to medium
Risk Score = 25.02 (Source: Sustainanalytics)
Has 35.71% women on the board (Source: Sustainanalytics)
A strict Biodiversity and Human Rights Policy
Highest Market Cap among competitors of $427 billion
Potential for Growth
Evidence: One of the fastest developers of Covid-19 vaccines
Price Relative Valuation
In $Billions
? Johnson & Johnson 467.31
?
?
?
?
Bristol Myers Squibb 171.96
Eli Lilly and Company 351.88
Merck & Co
278.39
Pfizer
286.73
Thankyou!
Purchase answer to see full
attachment
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