Johnson & Johnson products on a shelf in a New York store.
Lucas Jackson | Reuters
Johnson & Johnson Kenvue priced its initial public offering at $22 a share on Wednesday, near the high end of its announced range, in an enlarged deal that should fetch about $3.8 billion.
At this IPO price, the new company would be valued at approximately $41 billion. That makes Kenvue’s debut one of the largest IPOs in the US in over a year.
The company expected to price 151 million shares between $20 and $23 a share, according to a preliminary prospectus it filed with the Securities and Exchange Commission last week.
Proceeds from the show and any profits from related debt financing transactions will go to J&J, but Kenvue will keep $1.17 billion in cash and cash equivalents.
Goldman Sachs, JPMorgan Chase, and Bank of America are acting as lead underwriters for the IPO.
The shares will begin trading on the New York Stock Exchange on Friday under the symbol “KVUE”.
The spin-off, the largest IPO since Rivian’s November 2021 IPO, may not turn around the once-moribund IPO market, which plunged in 2022. But it could be a sign of life for IPOs in the states United
The debut of Kenvue also marks the largest restructuring in J&J’s 135-year history. J&J announced the split in late 2021 as an effort to streamline operations and refocus on its pharmaceutical and medical device divisions.
Meanwhile, Kenvue is full of household names familiar to investors and the larger public, like Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena, and J&J’s namesake baby powder and shampoo.
Here’s everything else you need to know about this week’s Kenvue IPO.
ownership after the subscription
J&J will control 91.9% of Kenvue after the IPO — or 90.8% if the underwriters exercise their options to purchase additional shares, according to a prospectus filing.
J&J plans to distribute the remaining shares of common stock to its shareholders later this year.
Until then, Kenvue will qualify as a “regulated company” under the New York Stock Exchange’s corporate governance rules, the filing says. This would allow Kenvue to avoid some of the listing criteria, 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 over which shareholders vote, such as the election of Kenvue board members, according to the lawsuit.
“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,” Kenvey said in the filing.
In the filing, the company said Kenvue is profitable and expects modest growth over the next few years.
Annual sales growth through 2025 is expected to be around 3% to 4% globally, according to the filing.
Kenvue reported sales of $14.95 billion for 2022 and net income of $1.46 billion on a pro forma basis. For the first quarter, which ended April 2, Kenvue estimated that it had sales of $3.85 billion and net income of about $330 million. First quarter results are preliminary.
Ten Kenvue brands generated nearly $400 million or more in sales last year.
Overall, Kenvue said 2022 sales were “well balanced” across the company’s three business divisions.
The company’s self-care unit, which includes eye care, cough and cold products, and vitamins, had net sales of $6 billion for 2022, accounting for 40% of total revenue.
Skin health and beauty products accounted for $4.4 billion in net sales last year, or 29% of all revenue. Among these products are shampoos, conditioners, hair loss treatments, and skin care.
Products in the Essential Health division, including baby products, mouthwashes, dentifrices, health protection and wound care, saw net sales of $4.6 billion, accounting for 31% of total revenue.
The company said in the filing that each of the three divisions was profitable on an adjusted operating income basis.
Kenvue noted that its global footprint is “geographically well balanced,” with nearly half of its 2022 net sales coming from outside North America.
According to the filing, the company’s net debt will be $7.75 billion.
Kenvue rounded up several J&J executives to harm the company, according to the report.
Thibaut Mongon, J&J’s executive vice president and global head of consumer health, will be CEO of the new public company. He will also sit at the board.
Paul Roh, J&J’s Chief Financial Officer of Consumer Health and former CEO of PepsiCo, will serve as CFO, and Meredith Stephens, J&J’s global vice president of the company’s consumer health supply chain division, will serve as COO.
Kenvue’s Chief People Officer, Chief Corporate Affairs Officer, Chief Technology and Data Officer, Chief Scientific Officer and group heads for various regions around the world are also from J&J.
The executives will lead a team of more than 22,000 employees in 165 countries and 25 in-house manufacturing sites, according to the preliminary prospectus.
Kenvue’s global headquarters will be in Summit, New Jersey.
Talc cancer lawsuits
J&J faces thousands of claims that baby talcum powder and other talcum products caused cancer. Some of these products fall under the company’s consumer health business.
But Kenvue will only have liabilities for those that arise outside the United States and Canada, according to its initial public offering filing as of January.
“As stated unequivocally and unequivocally, Johnson & Johnson has agreed to retain all talc liabilities — and to reimburse Kenvue for any and all costs — arising from litigation in the United States and Canada,” Eric Haas, vice president of litigation for Johnson & Johnson, said in a statement. statement last week.
But Kenvey said in the filing that “this compensation may not be sufficient” to protect the new company from the full amount of the liabilities.
J&J will continue to fight talc claims in bankruptcy court.
A federal bankruptcy judge in April paused nearly 40,000 lawsuits through mid-June. This decision was part of J&J’s second attempt to settle talc claims in bankruptcy proceedings.
The temporary suspension will give J&J time to try to get court approval for the proposed $8.9 billion settlement with the plaintiffs in the talc cases.
CNBC channel Leslie Baker Contribute to this report.