J&J’s consumer health spinoff Kenvue opens at $25.53, a 16% jump, in public market debut

Johnson & Johnson‘s consumer health spinoff Kenvue jumped 16% in its market debut on the New York Stock Exchange Thursday, marking the largest U.S. IPO in greater than a yr. 

The new firm opened at $25.53 per share after initially pricing its IPO at $22 Wednesday night time, towards the excessive finish of its goal vary.

Kenvue bought 172.8 million shares in an upsized deal that raised about $3.8 billion and valued the corporate at roughly $41 billion. 

At its opening value, Kenvue had an implied valuation of practically $48 billion. 

The firm, which trades beneath the ticker “KVUE,” holds a wealth of broadly recognized consumer manufacturers similar to Band-Aid, Tylenol, Listerine, Neutrogena, Aveeno and J&J’s namesake child powder. 

“Millions of customers all over the world this morning get up with a Kenvue product in their house,” CEO Thibaut Mongon, informed CNBC’s “Squawk on the Street” Thursday morning forward of the inventory’s debut.

Mongon beforehand served as J&J’s govt vice chairman and worldwide chair of consumer health. He will sit on Kenvue’s board.

Kenvue’s IPO marks the most important restructuring transfer in J&J’s 135-year historical past. 

J&J first introduced the spinoff in November 2021 as an effort to streamline operations and refocus on its faster-growing medical units and pharmaceutical divisions. 

But J&J will typically be capable of management the path of Kenvue’s enterprise and issues that shareholders vote on in the intervening time: The health large will personal 1.7 billion shares of Kenvue’s widespread inventory after the IPO completes, representing a 90.9% stake. J&J will scale back the remainder of its stake in Kenvue later this yr. 

Mongon informed CNBC that J&J has been “very clear” about its intent to separate from Kenvue in 2023.

Kenvue expects to pay a quarterly money dividend of roughly 20 cents per share beginning with the third quarter, which can finish Oct. 1. 

Mongon referred to as it an “enticing dividend coverage that will probably be a means for us to provide extra worth again to shareholders.”

Meanwhile, the consumer-focused Kenvue is already worthwhile. Kenvue posted $14.95 billion in gross sales for 2022 and a web earnings of $1.46 billion on a professional forma foundation, in line with a preliminary prospectus filed with the Securities and Exchange Commission final week.

“We do that from a place of energy. Kenvue is a wholesome enterprise,” Mongon informed CNBC.

For the primary quarter, which ended April 2, Kenvue estimates it raked in gross sales of $3.85 billion and web earnings of round $330 million. Those outcomes are preliminary.

Kenvue expects annual gross sales progress by 2025 to be about 3% to 4% globally, in line with the submitting.  

The IPO nonetheless leaves J&J responsible for 1000’s of allegations that its talc child powder and different talc merchandise precipitated most cancers. Those merchandise fall beneath the corporate’s consumer health enterprise, now Kenvue, however the spinoff will assume solely talc-related liabilities that come up outdoors the U.S. and Canada, in line with its IPO filing from January.

When requested concerning the liabilities, Mongon stated Kenvue is “laser-focused on what we do greatest: serving our clients and in addition our portfolio with the manufacturers that we talked about.” 

The debut raises hopes that the muted U.S. market for preliminary public choices might be recovering after it collapsed final yr. 

Kenvue’s IPO raised greater than each different providing to this point this yr, in line with a report from Renaissance Capital, with simply 40 IPOs in 2023 elevating a mixed $2.4 billion. 

The spinoff can also be the most important IPO since EV maker Rivian went public in November 2021.