J&J will reduce the Kenvue share by 80% through an initial public offering
- Johnson & Johnson said Monday it plans to reduce its stake in Kenvue by at least 80% via an exchange offer.
- The offer will allow J&J shareholders to exchange all or part of their shares for Kenvue common stock at a 7% discount.
- J&J said it received a waiver waiving the share lock-up period associated with Kenvue’s IPO in May.
Kenvue, a unit of Johnson & Johnson’s consumer health business.
CFOTO | Future Publishing | Getty Images
Johnson & Johnson said Monday it plans to reduce by at least 80% its stake in Kenvue, the consumer health business it spun off as an independent company earlier this year, via an initial public offering.
J&J owns 89.6% of Kenvue’s common stock, which amounts to more than 1.72 billion shares.
The exchange offer, also known as a split-off, will allow J&J shareholders to exchange all or part of their shares for Kenvue’s common stock at a 7% discount. The offering is expected to be tax-free, J&J said in a release.
The company noted that the split is voluntary for investors and is slated to close on August 18, which is far earlier than expected.
J&J said it received a waiver waiving the share lock-up period associated with Kenvue’s IPO in May. That lock-up agreement would have required J&J to wait 180 days to sell any of the shares.
“We believe now is the right time to distribute our Kenvue shares, and we are confident that a split is the right way forward to bring value to our shareholders,” J&J CEO Joaquin Duato said in a statement.
Duato added that the split helped sharpen J&J’s focus on its pharmaceutical and medical businesses — both of which helped the company beat second-quarter revenue and adjusted earnings last week.
Shares of J&J rose about 1% in premarket trading Monday, while shares of Kenvue fell nearly 3%
J&J first announced its intention to launch an exchange offer in its second-quarter earnings report Thursday, but the company provided few details about the plan. Kenvue shares fell after that announcement, despite second-quarter results that also topped Wall Street estimates.
Asked about J&J’s planned exchange offer Thursday, Kenvue CEO Thibaut Mongon told CNBC’s “Squawk on the Street” that the company is “pleased with the way the IPO has been received by shareholders.”
“We see a lot of alignment among our new investors in terms of seeing the potential of Kenvue, but I can tell you that we are absolutely ready to exit as a fully independent company,” he said.
