Johnson & Johnson products on a shelf in a Latest York store.
Lucas Jackson | Reuters
Johnson & Johnson’s consumer health business Kenvue priced its initial public offering at $22 per share On Wednesday, near the high end of the stated range, in an prolonged deal that may have raised about $3.8 billion.
At this IPO price, the latest company will probably be valued at around $41 billion. This makes Kenvue’s IPO one in all the biggest U.S. IPOs in over a 12 months.
related investment news
![Positive data from Alzheimer's drug trials push Eli Lilly stock to another record high and improve our outlook](https://image.cnbcfm.com/api/v1/image/106742803-16026237952020-10-13t203905z_1608884981_rc2whj9ipswl_rtrmadp_0_health-coronavirus-elililly.jpeg?v=1683135904)
The corporate expected to price 151 million shares in the range of $20 to $23 a share preliminary prospectus filed with the Securities and Exchange Commission last week.
The proceeds of the offering and any proceeds from the related debt financing transactions will go to J&J, but Kenvue will retain $1.17 billion in money and money equivalents.
Goldman Sachs, JPMorgan Chase, and Bank of America are serving as primary underwriters for the IPO.
The shares will begin trading on Friday on the Latest York Stock Exchange under the ticker “KVUE”.
spinoff, so-called largest IPOs since electric vehicle maker Rivian went public in November 2021, it alone may not have the option to completely reverse a dying IPO market that fell in 2022. But it surely may very well be an indication of life for US IPOs
Kenvue’s debut also marks the largest restructuring in J&J’s 135-year history. J&J announced the split in late 2021 as an attempt to streamline operations and refocus on its pharmaceutical and medical device divisions.
Meanwhile, Kenvue is filled with household names familiar to investors and the wider public, similar to Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena, and J&J Baby Powder and Shampoo.
Here’s every little thing you need to know about this week’s Kenvue IPO.
Post-IPO ownership
J&J will control 91.9% of Kenvue after the IPO – or 90.8% if insurers exercise their option to buy additional shares, according to the prospectus.
J&J plans to distribute the remaining common shares to its shareholders later this 12 months.
Until then, Kenvue will qualify as a “controlled company” under the NYSE corporate governance rules. It 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 have the option to control matters that shareholders vote on, similar to the election of directors to Kenvue’s board of directors, the filing reads.
“Johnson & Johnson will proceed to control the direction of our business, and concentrated ownership of our common stock may prevent you and other shareholders from influencing essential decisions,” Kenvue said in the filing.
Business performance
Kenvue is profitable and expects little growth over the next few years, the company said in a filing.
Annual sales growth through 2025 is projected to be around 3% to 4% globally.
Kenvue reported sales of $14.95 billion in 2022 and net income of $1.46 billion on a professional forma basis. Kenvue estimates that in the first quarter, which ended April 2, sales were $3.85 billion and net profit was roughly $330 million. These first-quarter results are preliminary.
Ten Kenvue brands reported sales of about $400 million or more last 12 months.
Overall, Kenvue said 2022 sales were “well balanced” across all three divisions of the company.
The corporate’s self-care unit, which incorporates eye care, cough and cold products, and vitamins, generated $6 billion in net sales in 2022, accounting for 40% of total revenue.
Skincare and sweetness products accounted for $4.4 billion in net sales last 12 months, or 29% of total revenue. These products include shampoos, conditioners, anti-hair loss treatments and skincare.
And products in the primary care division, including baby products, mouthwashes, dentifrices, hygiene products and wound care products, had net sales of $4.6 billion, accounting for 31% of total revenues.
Each of the three divisions was profitable based on adjusted operating income, the company said in the filing.
Kenvue noted that its global footprint is “geographically well-balanced,” with roughly half of its 2022 net sales coming from outside North America.
According to the application, the company can have a net debt of $7.75 billion.
Executive leadership
Kenvue rounded up several J&J directors to run the company, according to the records.
Thibaut Mongon, executive vp of J&J and global chairman of consumer health, will function chief executive officer of the newly formed public company. He may even sit on the council.
Paul Ruh, J&J’s chief financial officer for consumer health and former PepsiCo chief executive, will function chief financial officer, and Meredith Stevens, J&J’s global vp of consumer health, will function chief financial officer.
The chief human resources officer, chief corporate officer, chief technology and data officer, chief scientific officer and group presidents in various regions around the world are also from J&J.
Management will lead a team of greater than 22,000 employees in 165 countries and 25 own production facilities, according to the preliminary prospectus.
Kenvue global headquarters will probably be held in Summit, Latest Jersey.
Talc cancer lawsuits
J&J faces hundreds of allegations that its talc baby powder and other talc products cause cancer. A few of these products are a part of the company’s consumer health business.
But Kenvue will only take over talc liabilities that arise outside of the US and Canada IPO filing from January.
“As expressly and unequivocally stated, Johnson & Johnson has agreed to retain all talc obligations – and to indemnify Kenvue for any costs – resulting from litigation in the United States and Canada,” Erik Haas, vp of business & Johnson, said in an announcement last week.
But Kenvue said in the filing that “such damages will not be sufficient” to protect the latest company from the full amount of liabilities.
J&J will proceed to fight the talc claims in bankruptcy court.
A federal bankruptcy judge in April temporarily halted nearly 40,000 talc lawsuits until mid-June. The choice was a part of J&J’s second attempt to settle talc claims in bankruptcy proceedings.
The temporary lockdown will give J&J time to try to get court approval for a proposed $8.9 billion settlement with plaintiffs in the talcum cases.
— CNBC Leslie Picker contributed to this report.