December 9, 2023

Johnson & Johnson products on a shelf in a store in New York.

Lucas Jackson | Reuters

Johnson & Johnson Consumer Health Business Kenway IPO priced at $22 per share On Wednesday, near the high end of its prescribed range, an upsized deal would bring in about $3.8 billion.

At the IPO price, the new company is valued at about $41 billion. That makes Kenvue’s debut one of the largest U.S. IPOs in more than a year.

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The company expects to price its 151 million shares at between $20 and $23 each, according to a note. preliminary prospectus It filed with the Securities and Exchange Commission last week.

The proceeds of the offering and any profits from the related debt financing transaction will go to Johnson & Johnson, but Kenvue will retain $1.17 billion in cash and cash equivalents.

Goldman Sachs, JPMorgan and Bank of America are the lead underwriters for the IPO.

Shares will begin trading Friday on the New York Stock Exchange under the ticker symbol “KVUE.”

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Kenvue’s debut also marks the largest restructuring in J&J’s 135-year history. Johnson & Johnson announced a split in late 2021 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, such as Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena, and J&J’s eponymous baby powder and shampoo.

Here’s everything else you need to know about Kenvue’s IPO this week.

Post-IPO Ownership

According to the prospectus, J&J will control 91.9% of Kenvue after the IPO — or 90.8% if the underwriters exercise their option to buy additional shares.

Johnson & Johnson plans to distribute the remaining common shares to its shareholders later this year.

Until then, Kenvue will qualify as a “controlled company” under the New York Stock Exchange’s corporate governance rules, the filing said. That would allow Kenvue to avoid certain listing criteria, including the requirement that the company’s board of directors be composed of a majority of independent directors.

J&J generally has control over matters that shareholders vote on, such as the election of directors to Kenvue’s board, the filing said.

“Johnson & Johnson will continue to control the direction of our business, and the concentrated ownership of our common stock may prevent you and other shareholders from influencing major decisions,” Kenvue said in the filing.

Operating results

Kenvue is profitable and expects to grow moderately in the coming years, the company said in the filing.

Global annual sales are expected to grow by 3% to 4% through 2025, according to filings.

Kenvue posted sales of $14.95 billion in 2022 and estimated net income of $1.46 billion. For the first quarter ended April 2, Kenvue estimated sales of $3.85 billion and net income of about $330 million. These first-quarter results are preliminary.

Kenvue’s ten brands had sales of about $400 million or more last year.

Overall, Kenvue said 2022 sales across the company’s three business segments are “very balanced.”

The company’s self-care segment, which includes eye care, cough and cold, and vitamin products, will generate $6 billion in net sales in 2022, or 40% of total revenue.

Skin health and beauty products had net sales of $4.4 billion last year, or 29 percent of total revenue. These products include shampoos, conditioners, hair loss treatments and skin care products.

Products in the basic health segment, which includes baby products, mouthwashes and rinses, sanitary protection and wound care, had net sales of $4.6 billion, or 31% of total revenue.

All three segments were profitable on an adjusted operating income basis, the company said in the filing.

Kenvue noted that its global footprint is “very well balanced geographically,” with about half of its 2022 net sales coming from outside North America.

The filing shows the company has $7.75 billion in net debt.

executive management

Kenvue round up Johnson & Johnson executives Helm the company, according to the filing.

tibeaumongonJohnson & Johnson, executive vice president and global chairman of consumer health, will serve as CEO of the newly public company. He will also serve as a member of the board of directors.

J&J Consumer Health CFO Paul Ruh, a former PepsiCo executive, will serve as CFO and Meredith Stevens, global vice president of J&J Consumer Health Supply Chain, will serve as COO.

Kenvue’s chief personnel officer, chief corporate affairs officer, chief technology and data officer, chief scientific officer, and group presidents in different regions around the world also come from Johnson & Johnson.

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.

Kenway’s global headquarters will be held in Summit, New Jersey.

Talc Cancer Litigation

J&J faces thousands of allegations that its baby powder and other talc products cause cancer. Some of these products fall under the company’s consumer health business.

But Kenvue will only assume talc-related liabilities incurred outside the U.S. and Canada, according to it. IPO filing from January.

“As clearly and unequivocally stated, Johnson & Johnson agrees to retain all talc-related liability — and to indemnify Kenvue for any and all costs resulting from the litigation in the United States and Canada,” said Eric Ha, vice president of litigation, Johnson & Johnson. Erik Haas & Johnson said in a statement last week.

But Kenvue said in the filing that “such compensation may not be sufficient” to shield the new company from full liability.

J&J will continue to fight the talc claims in bankruptcy court.

A federal bankruptcy judge in April temporarily stayed nearly 40,000 talc powder lawsuits through mid-June. The decision is part of J&J’s second attempt to settle talc claims in bankruptcy proceedings.

The temporary stay will give J&J time to seek court approval for its $8.9 billion settlement with plaintiffs in the talc powder case.

—— CNBC Leslie Peake contributed to this report.