Actions Johnson & Johnsonconsumer health spin-off Kenvue jumped 20% in afternoon trading on Thursday after its debut on the Latest York Stock Exchange, making it the largest U.S. IPO in greater than a 12 months.
The brand new company opened at $25.53 per share at its original price initial public offering at $22 on Wednesday night, towards the upper end of the goal range.
At its opening price, Kenvue had an implied valuation of nearly $48 billion.
Kenvue sold 172.8 million shares in the offering, raising $3.8 billion and valuing the company at roughly $41 billion. The corporate initially planned to sell 151 million shares.
The corporate, which operates under the KVUE brand, owns many well-known consumer brands corresponding to Band-Aid, Tylenol, Listerine, Neutrogena, Aveeno and J&J’s baby powder of the same name.
“Thousands and thousands of consumers around the world get up this morning with a Kenvue product of their home” – CEO Thibaut Mongonhe told CNBC’s Squawk on the Street on Thursday morning before the IPO.
Mongon previously served as Executive Vice President of J&J and Global Chairman of Consumer Health. He’ll sit on the board of Kenvue.
Thibaut Mongon, CEO of Kenvue Inc., Johnson & Johnson’s consumer health company, rings the bell to have a good time its IPO on the Latest York Stock Exchange (NYSE) in Latest York, U.S., May 4, 2023.
Brendan McDermid | Reuters
Kenvue’s IPO marks the largest restructuring in J&J’s 135-year history.
J&J first announced the split in November 2021 to streamline operations and refocus on its faster-growing medical devices and pharmaceutical divisions.
But on the whole, the company will find a way to manage the direction of Kenvue’s business and the matters that shareholders vote on for now: The health giant will hold 1.7 billion shares of Kenvue common stock after its IPO, representing a 90.9% stake. J&J will reduce the remainder of its holdings in Kenvue later this 12 months.
Mongon told CNBC that J&J was “very clear” about its intention to separate from Kenvue this calendar 12 months.
Kenvue expects to pay a quarterly money dividend of roughly 20 cents per share starting in the third quarter, which ends October 1. Mongon called it “a sexy dividend policy that will likely be a way for us to generate more value back to shareholders.”
Thibaut Mongon, CEO, and Paul Ruh CFO of Kenvue Inc., Johnson & Johnson’s consumer health company, pose together during the company’s IPO on the Latest York Stock Exchange (NYSE) in Latest York City, U.S., May 4, 2023.
Brendan McDermid | Reuters
Meanwhile, the consumer-oriented Kenvue is already profitable. The spinoff reported $14.95 billion in 2022 sales and a net income of $1.46 billion on a professional forma basis, in response to preliminary prospectus filed with the Securities and Exchange Commission last week.
“We do it from a position of strength. Kenvue is a healthy business,” Mongon told CNBC.
Kenvue estimates that in the first quarter, which ended April 2, sales were $3.85 billion and net profit was roughly $330 million. These results are preliminary.
It expects annual sales growth to 2025 to be around 3% to 4% globally.
The IPO still leaves J&J liable for hundreds of allegations that its talc baby powder and other talc-containing products cause cancer. These products fall under the company’s consumer health business, currently Kenvue, but the spinoff will only take over talc commitments that arise outside of the US and Canada, in response to its IPO filing from January.
When asked about commitments, Mongon said Kenvue “is concentrated on what we do best: serving our customers in addition to our portfolio with the brands we mentioned.”
The debut raises hope that the subdued US IPO market can get better fell last 12 months.
Kenvue’s IPO brought in greater than some other offering this 12 months, in response to a report from Renaissance Capital. 40 IPOs in 2023 brought only a complete amount $2.4 billion.
The split can be the largest IPO since electric vehicle maker Rivian went public in November 2021.