Johnson & Johnson products on a shelf in a store in Latest York.
Lucas Jackson | Reuters
Johnson & Johnson’s consumer health business Kenvue priced its IPO at $22 per share Wednesday, toward the high end of its stated range, in an upsized deal that will herald about $3.8 billion, an individual acquainted with the pricing told CNBC.
At that IPO price, the brand new company might be valued at around $41 billion. That makes Kenvue’s debut one among the most important U.S. IPOs in greater than a yr.
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The corporate expected to cost 151 million shares between $20 and $23 per share, in line with a preliminary prospectus it filed with the Securities and Exchange Commission last week.
Proceeds from the offering and any profits from related debt-financing transactions will go to J&J, but Kenvue will retain $1.17 billion in money and money equivalents.
Goldman Sachs, JPMorgan Chase and Bank of America are acting because the lead underwriters for the IPO.Â
Shares will begin trading Friday on Latest York Stock Exchange under the ticker “KVUE.”
The spinoff, the biggest IPO since EV maker Rivian went public in November 2021, alone may not completely turn across the moribund IPO market, which plummeted in 2022. But it surely could also be an indication of life for initial public offerings within the U.S.Â
Kenvue’s debut also marks the most important 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.Â
Meanwhile, Kenvue is chock stuffed with household names familiar to investors and the larger public, reminiscent of Tylenol, Band-Aid, Listerine, Aveeno, Neutrogena, and J&J’s namesake baby powder and shampoo.Â
Here’s all the things else you want to find out about Kenvue’s IPO this week.Â
Ownership after IPO
J&J will control 91.9% of Kenvue after the IPO — or 90.8% if underwriters exercise their options to buy additional shares, in line with the prospectus filing.
J&J plans to distribute the remaining shares of common stock to its shareholders later this yr.
Until then, Kenvue will qualify as a “controlled company” under the company governance rules of the NYSE, the filing said. That can allow Kenvue to avoid certain listing standards, including a requirement that the corporate’s board be composed of a majority of independent directors.Â
J&J will generally give you the chance to manage matters that shareholders vote on, reminiscent of the election of directors to Kenvue’s board, the filing said.Â
“Johnson & Johnson will proceed to manage the direction of our business, and the concentrated ownership of our common stock may prevent you and other shareholders from influencing significant decisions,” Kenvue said within the filing.Â
Business performanceÂ
Kenvue is profitable and expects modest growth over the subsequent few years, the corporate said within the filing.
Annual sales growth through 2025 is projected to be about 3% to 4% globally, in line with the filing. Â
Kenvue posted $14.95 billion in sales for 2022 and a net income of $1.46 billion on a professional forma basis. 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 first-quarter results are preliminary.
Ten of Kenvue’s brands had roughly $400 million or more in sales last yr.
Overall, Kenvue said 2022 sales were “well balanced” across the corporate’s three business divisions.
The corporate’s self-care unit, which incorporates products for eye care, cough and cold, and vitamins, generated $6 billion in net sales for 2022, accounting for 40% of total revenue.
Skin health and wonder products accounted for $4.4 billion in net sales last yr, or 29% of overall revenue. Amongst those products are shampoos, conditioners, hair loss treatments and skincare.Â
And products within the essential health division, including baby products, mouthwash and dental rinses, sanitary protection and wound care, saw $4.6 billion in net sales, representing 31% of all-in revenue.
Each of the three divisions was profitable on an adjusted operating income basis, the corporate said within the filing.
Kenvue noted that its global footprint is “well balanced geographically,” with roughly half of 2022 net sales coming from outside North America.Â
The corporate may have net debt of $7.75 billion, in line with the filing.
Executive management
Kenvue rounded up several J&J executives to helm the corporate, in line with the filing.Â
Thibaut Mongon, J&J’s executive vice chairman and worldwide chair of consumer health, will function CEO of the newly public company. He may also sit on the board.
Paul Ruh, J&J’s chief financial officer of consumer health and a former PepsiCo executive, will function CFO, and Meredith Stevens, J&J’s worldwide vice chairman of the corporate’s consumer health supply chain department, will function COO.
Kenvue’s chief people officer, chief corporate affairs officer, chief technology and data officer, chief scientific officer and group presidents for various regions all over the world are also from J&J.Â
The executives will lead a team of greater than 22,000 employees across 165 countries and 25 in-house manufacturing sites, in line with the preliminary prospectus.Â
Kenvue’s global headquarters might be in Summit, Latest Jersey.Â
Talc-cancer lawsuitsÂ
J&J faces 1000’s of allegations that its talc baby powder and other talc products caused cancer. A few of those products fall under the corporate’s consumer health business.
But Kenvue will assume only talc-related liabilities that arise outside the U.S. and Canada, in line with its IPO filing from January.
“As unequivocally and unambiguously stated, Johnson & Johnson has agreed to retain all of the talc-related liabilities — and indemnify Kenvue for any and all costs — arising from litigation in the US and Canada,” Erik Haas, vice chairman of litigation for Johnson & Johnson, said in a press release last week.
But Kenvue said within the filing that “such indemnity will not be sufficient” to guard the brand new company against the total amount of liabilities.Â
J&J will proceed battling talc claims in bankruptcy court.Â
A federal bankruptcy judge in April temporarily halted nearly 40,000 talc lawsuits through mid-June. That call was a part of J&J’s second try and settle talc claims in bankruptcy proceedings.
The temporary hold will give J&J time to attempt to win court approval of its $8.9 billion proposed settlement with plaintiffs within the talc cases.
— CNBC’s Leslie Picker contributed to this report.
