Kenvue Debuts Historically with a 22% Jump in the Public Market

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Johnson & Johnson’s consumer-health spinoff Kenvue became the biggest U.S. IPO in over a year, with a 22% jump after its market debut on the New York Stock Exchange. The events of May 4, 2023, puts the company roughly at a value of $50 billion.  

Trading under the ticker KVUE, the company holds a range of widely used consumer brands such as Band-Aid, Tylenol, Listerine, Neutrogena, Aveeno, and the ever-famous J&J’s baby powder. “Millions of consumers around the world this morning wake up with a Kenvue product in their home,” CEO Thibaut Mongon said, ahead of the stock’s debut. Sitting on Kenvue’s board, Mongon also previously served as J&J’s executive vice president and worldwide chair of consumer health. 

Originally priced at its initial public offering at $22 on Wednesday night, the new company’s shares closed at $26.90 after opening at $25.53. Raising $3.8 billion from the 172.8 million shares sold in the offering, Kenvue was put at a roughly $41 billion valuation. Initially, the company had only planned to sell 151 million shares.

Kenvue’s IPO is the largest restructuring move made by J&J in its 135-year history. First announced as an attempt to focus on the rapidly growing medical devices and pharmaceutical divisions and streamlining operations, Kenvue has been around since November 2021.

The consumer brand Kenvue is already profitable, with a net income of $1.46 billion on a pro forma basis. According to the Securities and Exchange Commission, this spinoff posted $14.95 billion in sales for 2022. Kenvue is a healthy business with an expected annual sales growth through 2025 of about 3% to 4% globally. For the first quarter that ended on April 2, Kenvue estimates it raked in sales of $3.85 billion and a net income of around $330 million. 

Currently, the company still has major control over Kenvue’s affairs and the direction of its business. J&J will own 1.7 billion shares of Kenvue’s common stock after the IPO completes, representing a 90.9% stake. The company aims to reduce the rest of its stake in Kenvue later this year. The top executives have been “very clear” about the company’s intent to separate from Kenvue within this calendar year.

Kenvue expects to pay a quarterly cash dividend of about 20 cents per share starting with the third quarter, which ends this October 1. It has been described as an attractive dividend policy that will be a way for the company to produce more value back to shareholders.

Despite the IPO, J&J remains liable for the allegations against its talc products, especially baby powder. These products come under the company’s consumer-health business, but Kenvue will assume only talc-related liabilities that arise outside the U.S. and Canada.

Kenvue’s IPO has raised more than every other offering so far this year. The debut reinstills hope in the muted U.S. market for IPOs that is recovering after last year’s collapse. J&J’s Kenvue spinoff is also the largest IPO since the EV maker Rivian went public in November 2021.

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