J&J spinoff Kenvue IPO prices at $22, valuation surpass $40 billion

1. $Kenvue Inc.(KVUE)$ will begin trading on NYSE on Thursday

$Johnson & Johnson(JNJ)$ 's consumer health business, Kenvue, will be officially listed on the New York Stock Exchange on May 4, Eastern Time, under the stock code "KVUE" $Kenvue Inc.(KVUE)$ .

Kenvue plans to issue 151.2 million common shares in this IPO, with an issuance range between $20 and $23 per share. Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup, Deutsche Bank, BNP Paribas and other top international investment banks participated in this offering.

It is worth mentioning that the actual issue size of Kenvue has been further increased to 172.8 million common shares at an issue price of $22 per share. Based on this issue price, Kenvue raised more than $3.8 billion through this IPO. If the green shoe mechanism is implemented, the fundraising scale will exceed $4 billion, and the IPO market value will exceed $41 billion.

This means that while Kenvue has become the largest U.S. stock IPO since 2023, it is also the largest U.S. stock IPO since November 2021, and Kenvue’s fundraising will exceed the sum of funds raised by companies that have completed IPOs in U.S. stocks in 2023 twice as much.

2. $Kenvue Inc.(KVUE)$ 's 3 major business components

In November 2021, $Johnson & Johnson(JNJ)$ announced the largest spin-off and reorganization plan since its establishment in 1886. It plans to retain its pharmaceutical and medical device business as "New Johnson" and separate its consumer goods and personal health care businesses. It will be officially named "Kenvue" in September 2022.

Currently, $Kenvue Inc.(KVUE)$ has a total of 44 brands, of which more than 10 brands have net sales of more than $400 million in 2022, and many of its brands have reached the number one position in North American or global market segments, including Thailand. Nuo, Neutrogena, Listerine, Johnson & Johnson talcum powder, Bondi and other brands that Chinese consumers are familiar with. $Kenvue Inc.(KVUE)$ is the world's largest pure-play consumer healthcare company by 2022 net sales.

Let’s look at the 3 major business sectors of Kenvue:

The first main business is the personal care segment, which accounted for 40% of revenue in 2022 and net sales of $6.03 billion in 2022, including over-the-counter drugs and health care products, such as Tylenol for headaches and cold symptoms, pain relievers Mo Tring, etc., a total of 16 brands.

The second business sector is the skin health & beauty segment, which accounted for 29% of revenue in 2022 and net sales of $4.35 billion in 2022. This business is mainly skin care products, including Neutrogena, Aveeno, Doctor City, 16 brands including Dabao and others.

The third business part is the basic health segment, which accounted for 31% of revenue in 2022 and net sales of $4.57 billion in 2022, including wound care, oral care, baby care and women’s health brands, including Listerine, Band-Aid Bandages 12 brands including , OB tampon, baby care brand Vivvi & Bloom.

Overall, Kenvue achieved net sales of $14.95 billion in 2022, slightly lower than the $15.05 billion in 2021, and more than half of its revenue came from outside North America; its net profit was $2.09 billion, a year-on-year increase of 2.8%. In Q1 of 2023, net sales was $3.85 billion, a year-on-year increase of 7.3%.

3. The impact of $Kenvue Inc.(KVUE)$ ’s IPO on $Johnson & Johnson(JNJ)$ valuation

After the completion of the IPO, $Johnson & Johnson(JNJ)$ will continue to hold 1.716 billion common shares of Kenvue, accounting for 91.9% of the total share capital of 1.867 billion shares.

Kenvue's consumer unit, is one of the truly profitable parts of J&J, which brought J&J $15 billion in revenue in 2022.

The analysis believes that the spin-off of the consumer health business may help Johnson & Johnson's business get a better overall valuation, especially after the cloud of litigation clears. In fact, companies such as Procter & Gamble and Colgate-Palmolive have also split their business units.

Johnson & Johnson Chief Financial Officer Joe Wolk also said that the company raised its performance forecast due to strong growth in the three business areas of consumer health, pharmaceuticals and medical technology. Johnson & Johnson expects annual sales of US$97.9 billion to US$98.9 billion in 2023.

J&J, however, is still facing a long-running legal battle over its talcum-based baby powder product. Earlier this month, the company proposed paying nearly $9 billion over the next 25 years to settle thousands of allegations that its baby formula and other talc products caused cancer.

In fact, in addition to Kenvue, which will land on the New York Stock Exchange tonight, $Acelyrin, Inc.(SLRN)$ , a biotechnology company dedicated to the treatment of autoimmune diseases, will be listed on Nasdaq on May 5th, eastern time. Morgan Stanley, Jeffrey, TD Cowen and Piper Sandler are joint bookrunners, and the size of the fundraising, excluding the "green shoe mechanism," will also reach up to $370 million.

To some extent, the environment of the US IPO market is gradually improving.