J&J spin-off prices Kenvue IPO at $22, toward top end of expected range


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

Lucas Jackson | reuters

Johnson & Johnson consumer health business kenview Priced its IPO at $22 per share Wednesday, toward the high end of its announced range, in a larger deal that would bring in about $3.8 billion.

At that IPO price, the new company would be valued at around $41 billion. This makes Kenview’s debut one of the largest US IPOs in more than a year.

Related Investment News

CNBC Investment Club

The company expected the 151 million shares to be priced between $20 and $23 per share. preliminary prospectus It filed with the Securities and Exchange Commission last week.

Proceeds from the offering and any benefits from the related debt-financing transaction will go to J&J, but Kenvue will retain $1.17 billion in cash and cash equivalents.

Goldman Sachs, JPMorgan Chase And Bank of America Acting as lead underwriter for the IPO.

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

by-product, the biggest ipo Since EV maker Rivian goes public in November 2021, the moribund IPO alone may not come to market entirely, which decline In 2022. But it could be a sign of life for initial public offerings in the US

The launch of Kenview is also the largest restructuring in J&J’s 135-year history., J&J announced the split in late 2021 as a bid to streamline operations and refocus on its pharmaceutical and medical device divisions.

Meanwhile, Kenview is filled with household names familiar to investors and the larger public, such as Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena, and J&J’s namesake baby powder and shampoo.

Everything you need to know about Kenview’s IPO this week.

Ownership after IPO

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

J&J plans to distribute the remaining shares of common stock to its shareholders later this year.

Until then, Kenview will qualify as a “controlled company” under the NYSE’s corporate governance rules, the filing said. This would allow Kenvue to avoid certain listing standards, including a requirement that the company’s board be made up of a majority of independent directors.

The filing states that J&J will generally be able to control matters on which shareholders vote, such as the election of directors to Kenvue’s board.

“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,” Kenview said in the filing.

trade show

The company said in the filing that Kenview is profitable and expects modest growth over the next few years.

According to the filing, annual sales growth is projected to be around 3% to 4% globally through 2025.

Kenview posted $14.95 billion in sales for 2022 and $1.46 billion in net income on a pro forma basis. For the first quarter, which ended April 2, Kenview estimates it generated sales of $3.85 billion and net income of about $330 million. Those first quarter results are preliminary.

Ten of Kenview’s brands had sales of approximately $400 million or more 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, and vitamins, is projected to generate $6 billion in net sales 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 total revenue. Those products include shampoos, conditioners, hair loss treatments, and skin care.

And products in the Essential Health division, which includes baby products, mouthwash and dental rinses, sanitary protection and wound care, had net sales of $4.6 billion, representing 31% of total revenue.

The company said in the filing that each of the three divisions was profitable on an adjusted operating income basis.

Kenview said its global footprint is “geographically well balanced,” with nearly half of its 2022 net sales coming from outside North America.

The company will have a net debt of $7.75 billion, according to the filing.

executive management

kenview goes round Many Jammu and Kashmir officials to helm the company, according to the filing.

thibaut mongon, J&J’s executive vice president and worldwide president of consumer health, will serve as CEO of the new public company. He will also sit on the board.

Paul Ruh, chief financial officer of J&J’s consumer health and former PepsiCo executive, will serve as CFO, and Meredith Stevens, worldwide 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 Presidents of various regions around the world are also from J&J.

According to the preliminary prospectus, the executive will lead a team of more than 22,000 employees across 165 countries and 25 in-house manufacturing sites.

Kenview’s global headquarters The summit will take place in New Jersey.

Talc-Cancer Lawsuits

J&J has been accused by the thousands that its talc baby powder and other talc products cause cancer. Some of those products fall under the company’s consumer health business.

But Kenview will only assume talc-related liabilities that arise outside the US and Canada, according to IPO filing since January.

“As expressly and expressly stated, Johnson & Johnson has agreed to retain all liability relating to the talc – and indemnify Kenvue for any and all costs – in the United States and Canada Litigation arises,” Eric Haas, vice president of litigation at Johnson & Johnson, said in a statement last week.

But Kenview said in the filing that “such indemnification may not be sufficient” to protect the new company from the full amount of the liabilities.

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

In April a federal bankruptcy judge temporarily Stopped About 40,000 talk time lawsuits by mid-June. The decision was part of J&J’s second attempt to settle talc claims in bankruptcy proceedings.

Temporary stay will give J&J time to try to get court approval $8.9 billion Proposed settlement with plaintiffs in talc cases.

– CNBC leslie picker contributed to this report.

Source link