Kenvue, the consumer arm of healthcare large Johnson & Johnson, was valued at $41bn in an upsized preliminary public providing that marked the biggest US itemizing in virtually 18 months.
The carved-out firm bought $3.7bn of inventory at a worth of $22 per share — barely above the center of its worth vary, in line with an individual conversant in the small print. The inventory will start buying and selling on the New York Stock Exchange on Thursday.
The deal is the biggest since the IPO of electrical automobile maker Rivian in November 2021, and alone will greater than double the sum raised in conventional US listings this 12 months.
Kenvue produces over-the-counter medicines and types resembling Tylenol painkillers, Listerine mouthwash and Aveeno skincare merchandise. It reported income of $15bn and professional forma internet earnings of $1.5bn in 2022.
It additionally produces J&J’s child powder merchandise, which have been at the centre of years of authorized battles over whether or not they triggered most cancers, and the brand new firm has already been focused in lawsuits. J&J couldn’t be instantly reached for touch upon the Kenvue providing.
J&J, which can proceed to personal greater than 90 per cent of Kenvue’s shares, has agreed to protect it from any authorized prices associated to gross sales of child powder in the US and Canada. However, Kenvue cautioned in its prospectus that it “cannot assure” traders that the indemnity from its mum or dad could be enough, and additionally it is dealing with claims associated to gross sales in different international locations.
The US IPO market has been mired in considered one of its longest slowdowns in many years since early 2022 due to a mix of rising rates of interest, risky inventory markets and pessimistic financial forecasts. Before Wednesday’s deal, simply $2.4bn had been raised by conventional IPOs this 12 months, in line with Dealogic information.
Kenvue is uncommon amongst IPO candidates in that it’s worthwhile, backed by a big mum or dad group, and plans to pay a $1.5bn annual dividend. As such, most bankers don’t count on it to set off a right away surge in additional listings, however the deal is nonetheless being carefully watched throughout Wall Street as a take a look at of investor confidence.
“It’s pretty idiosyncratic, but . . . I think it’s a good sign,” stated a senior government at a financial institution that didn’t work on the deal.
Goldman Sachs, JPMorgan Chase and Bank of America had been lead underwriters on the itemizing.
Inflammatory illness specialist Acelyrin is ready to offer an extra take a look at for the beleaguered listings market in the approaching days with the biggest biotech IPO since June 2021. It is seeking to elevate as much as $477mn at a valuation of as much as $1.6bn.
The biotech sector has been significantly onerous hit by the IPO freeze, as early-stage firms depend on fairness gross sales to fund lengthy and costly drug developments.