Kenvue, a unit of Johnson & Johnson’s consumer health business.
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Johnson & Johnson on Monday said it plans to scale back by a minimum of 80% its stake in Kenvue, the patron health business it spun out as an independent company earlier this 12 months, via a stock exchange offer.
J&J owns 89.6% of Kenvue’s common stock, which amounts to greater than 1.72 billion shares.Â
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The exchange offer, also often known as a split-off, will allow J&J shareholders to swap all or a portion of their shares for Kenvue’s common stock at a 7% discount. The offer is predicted to be tax-free, J&J said in a release.Â
The corporate noted that the split-off is voluntary for investors and is slated to shut on Aug. 18, which is much sooner than expected.
J&J said it received a waiver that dismisses the share lockup period related to Kenvue’s initial public offering in May. That lockup agreement would have required J&J to attend 180 days to sell any of its shares.Â
“We imagine now could be the appropriate time to distribute our Kenvue shares, and we’re confident that a split-off is the suitable path forward to bring value to our shareholders,” J&J CEO Joaquin Duato said in a press release.Â
Duato added that the split-off will sharpen J&J’s deal with its pharmaceutical and medtech businesses – each of which helped the corporate beat on second-quarter revenue and adjusted earnings last week.Â
J&J first announced its intent to launch an exchange offer in its second-quarter earnings report on Thursday, but the corporate provided few details on the plan. Shares of Kenvue fell following that announcement, despite second-quarter results that also topped Wall Street estimates.Â
When asked about J&J’s planned exchange offer on Thursday, Kenvue CEO Thibaut Mongon told CNBC’s “Squawk on the Street” that the corporate is “pleased with the way in which that the IPO has been received by shareholders.”
“We see loads of alignment amongst our latest 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.Â
