Kenvue is a unit of Johnson & Johnson’s Consumer Health business.
Chief Financial Officer | Future Publishing | Getty Images
Johnson & Johnson Said on Monday it plans to reduce by at least 80% its shares Kenvue, a consumer health business, was spun off into an independent company in a stock exchange earlier this year.
Johnson & Johnson owns 89.6% of Kenvue’s common stock, which equates to more than 1.72 billion shares.
The exchange offer, also known as a spin-off, will allow Johnson & Johnson shareholders to exchange all or some of their shares for common shares of Kenvue at a discount of 7%. The benefit is expected to be tax-free, Johnson & Johnson said in a release.
The company noted that the spin-off was voluntary by investors and was expected to close on August 18, much earlier than expected.
J&J said it received a waiver removing the stock lockup period associated with Kenvue’s initial public offering in May. The lock-up agreement requires J&J to wait 180 days before selling any of its shares.
“We believe now is an opportune time to distribute Kenvue stock, and we believe a spin-off is the appropriate path to deliver value to shareholders,” Johnson & Johnson Chief Executive Joaquin Duato said in a statement.
Duato added that the spin-off will strengthen J&J’s focus on its pharmaceuticals and medical technology businesses — which helped the company grow its second-quarter revenue and last week’s adjusted earnings.
Shares of Johnson & Johnson (J&J) rose nearly 2% in early trading Monday, while Kenvue edged up.
Johnson & Johnson first announced its intention to launch a stock swap offer in its second-quarter earnings report on Thursday, but the company provided few details about the plan. While second-quarter results also beat Wall Street expectations, Kenvue’s stock fell following the announcement.
Asked about Johnson & Johnson’s planned stock-swap offer on Thursday, Kenvue CEO Thibaut Mongon told CNBC’s “Squawk on the Street” that the company was “satisfied with the shareholder response to the IPO.”
“We’ve seen a lot of consensus among new investors that they see the potential in Kenvue, but I can tell you that we’re more than ready to leave as a fully independent company,” he said.
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