Johnson & Johnson merchandise on a shelf in a retailer in New York.
Lucas Jackson | Reuters
Johnson & Johnson‘s consumer health business, Kenvue, is anticipated to go public this week within the largest U.S. IPO in additional than a 12 months.
That business is chock filled with family names acquainted to traders and the bigger public, equivalent to Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena and J&J’s namesake child powder and shampoo.
Kenvue is anticipated to set an IPO worth Wednesday evening and start trading Thursday morning on the New York Stock Exchange below the ticker “KVUE.”
The firm goals to promote greater than 151 million shares within the IPO at between $20 to $23 every, the corporate mentioned in a preliminary prospectus filed with the Securities and Exchange Commission final week. That would elevate roughly $3.25 billion on the midpoint worth of $21.50.
Proceeds from the providing and any income from associated debt-financing transactions will go to J&J, however Kenvue will retain $1.17 billion in money and money equivalents.
Kenvue can be valued at round $40 billion on the proposed share vary, primarily based on the 1.87 billion shares anticipated to be excellent as soon as the deal closes. J&J would maintain almost all of these excellent shares, amounting to greater than 1.71 billion shares, in accordance to the prospectus.
Goldman Sachs, JPMorgan Chase and Bank of America are appearing because the lead underwriters for the IPO.
If profitable, Kenvue can be the biggest IPO since EV maker Rivian went public in November 2021.
The spinoff alone might not utterly flip across the moribund IPO market, which plummeted in 2022. But it could be an indication of life for preliminary public choices within the U.S.
Kenvue’s debut would additionally mark the biggest restructuring in J&J’s 135-year historical past. J&J announced the split in late 2021 as a bid to streamline operations and refocus on its pharmaceutical and medical system divisions.
Here’s every part else you want to know about Kenvue’s upcoming IPO this week.
Ownership after IPO
J&J will management 91.9% of Kenvue after the IPO — or 90.8% if underwriters train their choices to buy further shares, in accordance to the prospectus submitting.
J&J plans to distribute the remaining shares of frequent inventory to its shareholders later this 12 months.
Until then, Kenvue will qualify as a “managed firm” below the company governance guidelines of the NYSE, the submitting mentioned. That will enable Kenvue to keep away from sure itemizing requirements, together with a requirement that the corporate’s board be composed of a majority of unbiased administrators.
J&J will typically have the ability to management issues that shareholders vote on, such because the election of administrators to Kenvue’s board, the submitting mentioned.
“Johnson & Johnson will proceed to management the course of our business, and the concentrated possession of our frequent inventory might stop you and different shareholders from influencing important selections,” Kenvue mentioned within the submitting.
Business efficiency
Kenvue is worthwhile and expects modest progress over the subsequent few years, the corporate mentioned within the submitting.
Annual gross sales progress by means of 2025 is projected to be about 3% to 4% globally, in accordance to the submitting.
Kenvue posted $14.95 billion in gross sales for 2022 and a internet revenue of $1.46 billion on a professional forma foundation. For the primary quarter that ended April 2, Kenvue estimates it raked in gross sales of $3.85 billion and internet revenue of round $330 million. Those first-quarter outcomes are preliminary.
Ten of Kenvue’s manufacturers had roughly $400 million or extra in gross sales final 12 months.
Overall, Kenvue mentioned 2022 gross sales had been “effectively balanced” throughout the corporate’s three business divisions.
The firm’s self care unit, which incorporates merchandise for eye care, cough and chilly and nutritional vitamins, generated $6 billion in internet gross sales for 2022, accounting for 40% of complete income.
Skin health and wonder merchandise accounted for $4.4 billion in internet gross sales final 12 months, or 29% of total income. Among these merchandise are shampoos, conditioners, hair loss therapies and skincare.
And merchandise within the important health division, together with child merchandise, mouthwash and dental rinses, sanitary safety and wound care, noticed $4.6 billion in internet gross sales, representing 31% of all-in income.
Each of the three divisions was worthwhile on an adjusted working revenue foundation, the corporate mentioned within the submitting.
Kenvue famous that its international footprint is “effectively balanced geographically,” with roughly half of 2022 internet gross sales coming from outdoors North America.
The firm could have internet debt of $7.75 billion, in accordance to the submitting.
Executive administration
Kenvue rounded up several J&J executives to helm the corporate, in accordance to the submitting.
Thibaut Mongon, J&J’s government vp and worldwide chair of consumer health, will function CEO of the newly public firm. He will even sit on the board.
Paul Ruh, J&J’s chief monetary officer of consumer health and a former PepsiCo government, will function CFO, and Meredith Stevens, J&J’s worldwide vp of the corporate’s consumer health provide chain division, will function COO.
Kenvue’s chief folks workplace, chief company affairs workplace, chief expertise and knowledge officer, chief scientific officer and group presidents for various areas all over the world are additionally from J&J.
The executives will lead a crew of greater than 22,000 staff throughout 165 international locations and 25 in-house manufacturing websites, in accordance to the preliminary prospectus.
Kenvue’s global headquarters will probably be in Summit, New Jersey.
Talc-cancer lawsuits
J&J faces hundreds of allegations that its talc child powder and different talc merchandise precipitated most cancers. Some of these merchandise fall below the corporate’s consumer health business.
But Kenvue will solely assume talc-related liabilities that come up outdoors of the U.S. and Canada, in accordance to its IPO filing from January.
“As unequivocally and unambiguously said, Johnson & Johnson has agreed to retain all of the talc-related liabilities – and indemnify Kenvue for any and all prices – arising from litigation within the United States and Canada,” Erik Haas, vp of litigation for Johnson & Johnson mentioned in an announcement final week.
But Kenvue mentioned within the submitting that “such indemnity is probably not enough” to shield the brand new firm towards the complete quantity of liabilities.
J&J will proceed battling talc claims in chapter court docket.
A federal chapter decide final month quickly halted almost 40,000 talc lawsuits by means of mid-June. That resolution was a part of J&J’s second try to settle talc claims in chapter proceedings.
The non permanent maintain will give J&J time to attempt to win court docket approval of its $8.9 billion proposed settlement with plaintiffs within the talc instances.
