IPO-pedia | Johnson & Johnson's subsidiary Kenvue will be listed on May 4

Kenvue announced an expanded offering on May 3. It will raise $3.8 billion in the IPO by offering 172.8 million shares of common stock at $22 per share.

According to the prospectus, Johnson & Johnson will receive the ultimate proceeds from the offering, while Kenvue expects to retain $1.17 billion in cash and cash equivalents for general corporate purposes.

After the completion of the IPO, Johnson & Johnson will own 1,716,160,000 shares of Kenvue's common stock, representing approximately 90% of the total outstanding shares of Kenvue's common stock. Johnson & Johnson intends to make a tax-free distribution to its shareholders of all or a portion of its remaining equity interest.

Goldman Sachs, J.P. Morgan Securities and BofA Securities are the representatives of the underwriters.

Business Overview

On November 12, 2021, Johnson & Johnson announced its intent to separate the Company’s Consumer Health business, creating a new publicly traded company. The new company was established through a spin-off on February 23, 2022, in Delaware, and was named Kenvue on September 8 of the same year.

Kenvue is the world’s largest pure-play consumer health company by revenue with $15.0 billion in net sales in 2022. The company said it holds leadership positions across a $369 billion consumer health market that they expect to grow at a compounded annual growth rate (“CAGR”) of 3% to 4% globally through 2025.

The company has a global team of more than 22,000 employees, presence in more than 165 countries and 25 in-house manufacturing sites. Their consumer health portfolio includes self care, skin care and beauty and essential personal care products. They aslo own some iconic brands—including Tylenol, Neutrogena, Listerine, Johnson’s, Band-Aid, Aveeno, Zyrtec and Nicorette.

Kenvue has expressed that they hope to maintain its leading position across the consumer health categories and leveraging its robust global resources for long-term growth. However, the company faces competition from established market leaders such as P&G, Unilever, Beiersdorf, L’Oreal as well as from emerging niche brands in its three core areas.

Kenvue’s strategy for growth includes increasing brand awareness, ensuring product availability, and continuously innovating. In addition, the company aims to selectively expand into new categories and regions while also considering acquisition opportunities that can enhance the competitiveness of its core business.

As stated in the prospectus, Kenvue’s revenue for the fiscal years 2020, 2021, and 2022 were $14.47 billion, $15.05 billion, and $14.95 billion, respectively. This represents a compound annual growth rate of 1.66%. The net profit (loss) for those years were ($879 million), $2,031 million, and $2,087 million.

The company initially expected to pay quarterly cash dividends of approximately $0.20 per share to common stockholders commencing the fiscal quarter ending October 1, 2023, subject to the discretion of the Board.

Johnson & Johnson’s Q1 2023 earnings report revealed that its consumer health business contributed 15.6% in sales results, Consumer Health worldwide adjusted operational sales increased 11.3%.

by jaryn & laura