Dive Brief:
- Johnson & Johnson is seeking a valuation of more than $40 billion for its consumer health spinoff in an initial public offering set for later this year, new documents filed with regulators on Monday show.
- The spinoff, called Kenvue, aims to raise at least $3 billion via the IPO, revealing it intends to sell just over 151 million shares for between $20 and $23 each. Banks underwriting the deal will have an option to push additional shares that could push the total amount raised higher.
- Kenvue’s IPO, one of the last major steps in J&J’s planned split, would be the largest in the U.S. since electric car maker Rivian’s initial offering in November 2021, according to Renaissance Capital. Among life sciences IPOs, it would easily surpass Royalty Pharma’s $2.2 billion IPO, and dwarf those of any biotechnology company over the past five years, BioPharma Dive data show.
Dive Insight:
Kenvue’s IPO could boost a stagnant market for initial public offerings in the U.S. The slowdown has been particularly acute among drugmakers, who often account for a substantial share of new listings. Only five biotechs have priced IPOs so far this year, by far the slowest pace to begin any year since 2018, according to data from BioPharma Dive.
Kenvue, which sells brands like Tylenol, Listerine and Band-Aid, is a much larger and more profitable company than the typical company to seek an IPO, especially compared to the early-stage biotechs that typically seek to raise cash via an offering.
Net sales by the division totaled $15 billion in 2022, and just over $3.8 billion over the first three months of this year. Ten brands earned at least $400 million last year. Once a standalone company, Kenvue will employ roughly 22,000 staff across many of the world’s countries.
For J&J, spinning out its consumer arm is a major corporate shake-up that will result in a smaller company more focused on pharmaceuticals and medical devices, which together earned nearly $21 billion in sales over the first quarter.
It’s a move with echoes across the pharmaceutical industry. Large drugmakers have shifted away from the conglomerate model that many pursued over the past two decades, choosing instead to narrow their offerings to higher margin prescription drugs.
The split will also distance J&J from legal battles over alleged consumer harms caused by its talc-based baby powder, which have risked its corporate reputation.
Once Kenvue successfully prices its IPO, J&J will still own more than 90% of Kenvue. The pharma plans to make a tax-free distribution of all or a portion of that equity interest to its shareholders, potentially as a special dividend.
Kenvue shares will list on the New York Stock Exchange under the ticker “KVUE.”