KVUE starts trading on NYSE

Shares of Johnson & Johnson‘s consumer-health spinoff Kenvue jumped 22% Thursday after its market debut on the Latest York Stock Exchange, making it the largest U.S. IPO in greater than a yr. 

The brand new company’s shares closed at $26.90 after opening at $25.53. Kenvue originally priced its initial public offering at $22 Wednesday night, toward the high end of its goal range.

Thursday’s move values the corporate at roughly $50 billion.

Kenvue sold 172.8 million shares within the offering, raising $3.8 billion and putting the corporate at a valuation of roughly $41 billion. The corporate initially planned to sell 151 million shares.

The corporate, which trades under the ticker KVUE, holds a wealth of widely known consumer brands comparable to Band-Aid, Tylenol, Listerine, Neutrogena, Aveeno and J&J’s namesake baby powder. 

“Tens of millions of consumers around the globe this morning get up with a Kenvue product of their home,” CEO Thibaut Mongon, told CNBC’s “Squawk on the Street” Thursday morning ahead of the stock’s debut.

Mongon previously served as J&J’s executive vp and worldwide chair of consumer health. He’ll sit on Kenvue’s board.

Kenvue’s IPO marks the biggest restructuring move in J&J’s 135-year history. 

J&J first announced the spinoff in November 2021 as an effort to streamline operations and refocus on its faster-growing medical devices and pharmaceutical divisions. 

But the corporate will generally find a way to regulate the direction of Kenvue’s business and matters that shareholders vote on in the meanwhile: The health giant will own 1.7 billion shares of Kenvue’s common stock after the IPO completes, representing a 90.9% stake. J&J will reduce the remainder of its stake in Kenvue later this yr. 

Mongon told CNBC that J&J has been “very clear” about its intent to separate from Kenvue this calendar yr.

Kenvue expects to pay a quarterly money dividend of about 20 cents per share starting with the third quarter, which ends Oct. 1. Mongon called it an “attractive dividend policy that will probably be a way for us to supply more value back to shareholders.”

Meanwhile, the consumer-focused Kenvue is already profitable. The spinoff posted $14.95 billion in sales for 2022 and a net income of $1.46 billion on a professional forma basis, in response to a preliminary prospectus filed with the Securities and Exchange Commission last week.

“We do that from a position of strength. Kenvue is a healthy business,” Mongon told CNBC.

For the primary quarter, which ended April 2, Kenvue estimates it raked in sales of $3.85 billion and net income of around $330 million. Those results are preliminary.

It expects annual sales growth through 2025 to be about 3% to 4% globally, in response to the filing.  

The IPO still leaves J&J accountable for 1000’s of allegations that its talc baby powder and other talc products caused cancer. Those products fall under the corporate’s consumer-health business, now Kenvue, however the spinoff will assume only talc-related liabilities that arise outside the U.S. and Canada, in response to its IPO filing from January.

When asked in regards to the liabilities, Mongon said Kenvue is “laser-focused on what we do best: serving our customers and likewise our portfolio with the brands that we mentioned.” 

The debut raises hopes that the muted U.S. marketplace for initial public offerings might be recovering after it collapsed last yr. 

Kenvue’s IPO raised greater than every other offering thus far this yr, in response to a report from Renaissance Capital. The 40 IPOs in 2023 have only raised a combined $2.4 billion. 

The spinoff can also be the biggest IPO for the reason that electric vehicle maker Rivian went public in November 2021.