- Johnson & Johnson’s consumer healthcare business Kenvue is set to go public this week in the biggest U.S. IPO in more than a year.
- Kenvue is expected to set an initial public offering price on Wednesday night and trade Thursday morning.
- The spin-off will be listed on the New York Stock Exchange under the symbol “KVUE”.
- This business unit is full of household names like Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena, and J&J’s namesake baby powder and shampoo.
Johnson & Johnson products on a shelf in a store in New York.
lucas jackson | Reuters
Johnson & Johnson’s consumer healthcare business Kenvue is set to go public this week in the biggest U.S. IPO in more than a year.
This company is full of household names familiar to investors and the general public, such as Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena and J&J’s namesake baby powder and shampoo.
Kenvue is expected to set an IPO price Wednesday evening and begin trading Thursday morning on the New York Stock Exchange under the symbol “KVUE”.
The company aims to sell more than 151 million shares in the IPO at a price of between $20 and $23 each, the company said in a preliminary prospectus filed with the Securities and Exchange Commission last week. It would fetch around $3.25 billion at the median price of $21.50.
Proceeds from the offering and all proceeds from related debt financing transactions will go to J&J, but Kenvue will retain $1.17 billion in cash and cash equivalents.
Kenvue would be valued at around $40 billion in the proposed share range, based on the 1.87 billion shares expected to be outstanding once the deal closes. J&J reportedly owns nearly all of those outstanding shares, or more than 1.71 billion shares, according to the prospectus.
Goldman Sachs, JPMorgan Chase and Bank of America are acting as lead underwriters for the IPO.
If successful, Kenvue would be the biggest IPO since electric vehicle maker Rivian went public in November 2021.
The fallout alone might not completely reverse the moribund IPO market, which tumbled in 2022. But it could be a sign of life for U.S. IPOs.
Kenvue’s debut would also mark the biggest restructuring in J&J’s 135-year history. J&J announced the split in late 2021 in a bid to streamline operations and refocus on its pharmaceutical and medical device divisions.
Here’s everything you need to know about Kenvue’s upcoming IPO this week.
J&J will control 91.9% of Kenvue after the IPO — or 90.8% if the underwriters exercise their options to buy additional shares, according to the prospectus filing.
J&J expects to distribute the remaining common shares to its shareholders later this year.
Until then, Kenvue will be considered a “controlled company” under NYSE corporate governance rules, according to the filing. This will allow Kenvue to avoid certain listing standards, including the requirement that the company’s board of directors be made up of a majority of independent directors.
J&J will generally be able to control matters on which shareholders vote, such as the election of directors to Kenvue’s board, the filing says.
“Johnson & Johnson will continue to control the direction of our business, and concentrated ownership of our common stock may prevent you and other shareholders from influencing important decisions,” Kenvue said in the filing.
Kenvue is profitable and expects modest growth over the next few years, the company said in the filing.
Annual sales growth through 2025 is expected to be around 3% to 4% worldwide, according to the filing.
Kenvue reported 2022 revenue of $14.95 billion and net income of $1.46 billion on a pro forma basis. For the first quarter that ended April 2, Kenvue estimates it had sales of $3.85 billion and net income of about $330 million. These first quarter results are preliminary.
Ten of Kenvue’s brands had sales of around $400 million or more last year.
Overall, Kenvue said 2022 sales were “well balanced” across the company’s three business divisions.
The company’s personal care unit, which includes eye care, cough and cold products and vitamins, generated $6 billion in net sales for 2022, representing 40% of revenue. total business.
Health and beauty products for skin accounted for $4.4 billion in net sales last year, or 29% of overall revenue. Among these products are shampoos, conditioners, hair loss treatments and skin care.
And the essential health division’s products, including baby products, mouthwashes and mouthwashes, sanitary protection and wound care, had net sales of $4.6 billion, i.e. 31% of overall turnover.
Each of the three divisions was profitable based on adjusted operating profit, the company said in the filing.
Kenvue noted that its global footprint is “well balanced geographically,” with about half of 2022 net sales coming from outside of North America.
The company will have net debt of $7.75 billion, according to the filing.
Kenvue rounded up several J&J executives to run the company, according to the filing.
Thibaut Mongon, executive vice president of J&J and global president of consumer health, will serve as CEO of the new public company. He will also sit on the board of directors.
Paul Ruh, J&J’s CFO of Consumer Health and former PepsiCo executive, will serve as CFO, and Meredith Stevens, J&J’s Global Vice President of Consumer Health Supply Chain company, will assume the role of Chief Operating Officer.
Kenvue’s Chief Personnel Office, Chief Corporate Affairs Office, Chief Technology and Data Officer, Chief Scientific Officer and Group Presidents for various regions of the world are also from J&J.
The executives will lead a team of more than 22,000 employees in 165 countries and 25 internal manufacturing sites, according to the preliminary prospectus.
Kenvue’s global headquarters will be in Summit, New Jersey.
J&J faces thousands of allegations that its talc-based baby powder and other talc-based products have caused cancer. Some of these products fall under the company’s consumer healthcare business.
But Kenvue will only assume talc-related liabilities that arise outside of the United States and Canada, according to its January IPO filing.
“As unequivocally and unambiguously stated, Johnson & Johnson has agreed to retain all talc-related liabilities – and to indemnify Kenvue for all costs – arising from litigation in the United States and Canada,” said Erik Haas, vice president of litigation at Johnson. & Johnson said in a statement last week.
But Kenvue said in the filing that “such indemnity may not be sufficient” to protect the new company against the full amount of liability.
J&J will continue to fight talc claims in bankruptcy court.
Last month, a federal bankruptcy judge temporarily halted nearly 40,000 talc lawsuits through mid-June. The move was part of J&J’s second attempt to settle talc’s claims in bankruptcy proceedings.
The temporary stay will give J&J time to try to get court approval for its proposed $8.9 billion settlement with plaintiffs in the talc cases.