Johnson & Johnson is seeking to raise as much as $3.5 billion in the spinoff its consumer health business, which would be the biggest US initial public offering since 2021.
(Bloomberg) — Johnson & Johnson is seeking to raise as much as $3.5 billion in the spinoff its consumer health business, which would be the biggest US initial public offering since 2021.
Kenvue Inc., as the company will be known, filed Monday to sell more than 151 million shares for $20 to $23 each. At the top of that range, Kenvue would have a market value of almost $43 billion based on the outstanding shares listed in its filing.
The spinoff will include dozens of J&J brands that are household names, including Tylenol, Listerine, Neutrogena and Nicorette, according to its filings with the US Securities and Exchange Commission.
Kenvue’s IPO could be the biggest since Rivian Automotive Inc.’s $13.7 billion offering in November 2021, providing a long-awaited spark for investors.
Slow Start
The filing follows the slowest start to a year for US IPOs since 2016, according to data compiled by Bloomberg. Since Jan. 1, only $4 billion has been raised 60 companies, compared with $15 billion in 104 listings during the same period last year, the data show.
To help finance its separation from J&J, Kenvue tapped the US investment-grade market in March, selling $7.75 billion in bonds.
Kenvue’s business, on a pro forma basis, had net income of about $1.5 billion on sales of almost $15 billion for the year ended Jan. 1, according to its filings.
With more than 22,000 employees and 25 in-house manufacturing sites, Kenvue said it does business in more than 165 countries and is the world’s largest pure-play consumer health company by revenue. North America accounts for half of Kenvue’s sales, with 21% in Asia and Europe, the Middle East and Africa accounting for another 21% and Latin America the remainder.
Proceeds from the share sale will go to J&J, along with proceeds from related debt financing transactions, according to the filings. J&J will own 92% of Skillman, New Jersey-based Kenvue’s shares after it’s public.
Talc Lawsuits
J&J, with a market value of more than $426 billion, has been saddled by thousands of lawsuits alleging talc in Johnson’s baby powder cause cancer. That’s contributed to a 9.8% decline in its share price in the past year in contrast to the 1% gain in S&P 500 Health Care Index. While J&J is retaining liability for the talc cases, Kenvue cautions that it may be subject to claims arising outside the US and Canada.
Kenvue’s IPO is being led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of America Corp. Kenvue plans for its shares to trade on the New York Stock Exchange under the symbol KVUE.
(Updates with breakdown of revenue in eighth paragraph.)
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