J&J reduces stake in Kenvue by 80% through public offering

Norman Ray

Global Courant

Kenvue, part of Johnson & Johnson’s consumer health division.

CFOTO | Future publication | Getty Images

Johnson & Johnson on Monday said it plans to cut by at least 80% his commitment in Kenvue, the consumer health company it spun off as an independent company earlier this year through an initial public offering.

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J&J owns 89.6% of Kenvue common stock, representing more than 1.72 billion shares.

The exchange offer, also known as a split-off, allows J&J shareholders to exchange all or part of their shares for Kenvue’s common stock at a discount of 7%. The offer is expected to be tax-free, J&J said in a press release.

The company noted that the spin-off is voluntary for investors and is expected to close on August 18, which is much earlier than expected.

J&J said it has received a waiver rejecting the stock freeze 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 its stock.

“We believe this is the right time to distribute our Kenvue shares, and we believe a divestment is the right path to create value for our shareholders,” J&J CEO Joaquin Duato said in a statement.

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Duato added that the spin-off will sharpen J&J’s focus on its pharmaceutical and medtech businesses — both of which helped the company beat second-quarter revenue and adjusted earnings last week.

Shares of J&J were up nearly 2% in early trading Monday, while Kenvue was up slightly.

J&J first announced its intention to make an exchange offer Thursday in its second-quarter earnings report, but the company gave few details about the plan. Shares of Kenvue fell after that announcement, despite its second-quarter results also beating Wall Street estimates.

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When asked about J&J’s planned exchange offer on Thursday, Kenvue CEO Thibaut Mongon told CNBC’s “Squawk on the Street” that the company is “satisfied with how the IPO has been received by shareholders.”

“We’re seeing a lot of alignment among our new investors in seeing the potential of Kenvue, but I can tell you we’re totally ready to go as a fully independent company,” he said.

J&J reduces stake in Kenvue by 80% through public offering

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