J&J investors can soon swap shares for Kenvue stock

Johnson & Johnson on Thursday said its shareholders will soon have the option to swap their shares for stock of Kenvue, which spun out as an independent consumer health company just two months ago.

J&J owns nearly 90% of Kenvue shares and plans to scale back its stake through an exchange offer that might launch “as early as the approaching days,” depending on market conditions, J&J CFO Joseph Wolk said through the company’s second-quarter earnings call. 

That process, also often known as a split-off, will allow J&J shareholders to exchange all or a portion of their shares for Kenvue’s common stock. J&J didn’t provide further details on the planned offer.

But Wolk said a split-off is the “most advantageous type of separation” for J&J. He added that after the split, Kenvue will almost certainly have a shareholder base that wishes to own its stock.

When asked about J&J’s planned exchange offer, Kenvue CEO Thibaut Mongon told CNBC’s “Squawk on the Street” that the corporate is “pleased with the best way that the IPO has been received by shareholders.”

“We see a whole lot of alignment amongst our recent investors in seeing the potential of Kenvue, but I can let you know that we’re fully ready to go away as a totally independent company,” he said. 

Kenvue shares fell following the announcement Thursday, despite the fact that the corporate beat earnings and revenue estimates in its first quarterly report since its IPO. Kenvue also initiated a quarterly money dividend of about 20 cents per share for the third quarter, payable to shareholders on Sept. 7.

J&J’s second-quarter results also beat expectations on Thursday, sending the corporate’s stock 6% higher. 

Previously, J&J didn’t disclose whether it will divest its Kenvue shares through a split-off or a derivative. The latter would involve distributing Kenvue stock to existing J&J shareholders relatively than giving them the choice to exchange. 

The suggested timing of the offer got here as a surprise.

Kenvue’s IPO filing in April said J&J agreed to attend 180 days to sell or transfer its shares of the brand new company, which might have limited any split-off until the top of October on the earliest. 

The filing said J&J would only have the option to achieve this with written permission from Goldman Sachs and JPMorgan Chase, the IPO’s lead underwriters.