By
Temitope Olatunji
April 23rd, 2024
Pharmaceutical powerhouse J&J expects to price its Kenvue IPO shares at $20 to $23 for a potential $40 billion company valuation.
Johnson & Johnson (NYSE: JNJ) plans to price shares of its upcoming Kenvue Inc IPO between $20 and $23. The initial public offering roadshow constitutes more than $151 million shares of common stock and would be valued at $40 billion in the share range.
Johnson & Johnson announced it would launch the Kenvue IPO later this year in what could be the largest of its kind in the US this year. Kenvue, a wholly owned subsidiary of the pharmaceutical giant that comprises its Consumer Health Business, expects to grant the underwriters additional share purchase options. The J&J spinoff would allow a 30-day option to purchase 22,680,600 more shares of common stock. Commentaries explain that this other stock would cover any possible over-allotments during the IPO’s initial launch.
J&J, which reportedly met with prospective investors on Monday, will own 1,716,160,000 shares of Kenvue’s common stock. This stake represents almost 92% of the total outstanding shares of the health spinoff’s common stock. However, J&J’s Kenvue stake could also end up being just under 91% if the underwriters fully exercise their over-allotment option.
Kenvue IPO Eyes $3.15M in Net Proceeds
In a regulatory filing Monday, Johnson & Johnson estimated that the Kenvue IPO would realize approximately $3.15 million in net proceeds. The New Jersey-based pharmaceutical giant also stated that it would claim all proceeds and profits from related debt-financing transactions. J&J did not specify when it expects to complete its separation from Kenvue. However, the company said it would likely happen by mid to late 2023, with Kenvue trading on the New York Stock Exchange as KVUE.
In a preliminary prospectus filed with the Securities and Exchange Commission (SEC), J&J listed the IPO’s lead underwriters. The pharmaceutical corporation said Goldman Sachs (NYSE: GS), JPMorgan (NYSE: JPM), and Bank of America (NYSE: BAC) are the joint lead book-running managers for the IPO.
Johnson & Johnson’s Consumer Health Business sells products ranging from Band-Aid bandages and Listerine mouthwash to pain reliever Tylenol and Johnson’s baby powder. In addition, the consumer healthcare and medical technology corporation also produces and sells skin care products like Neutrogena and Aveeno.
J&J Consumer Health Business
In 2022, J&J’s Consumer Health Business generated $15 billion in net revenue and $3.8 billion in sales in Q1 2023. According to J&J’s latest earnings report, the unit’s last quarter haul is a more than 7% increase compared to the previous year. Although the pharmaceutical giant beat earnings and revenue expectations for the year’s first quarter, it lowered its pharmaceutical sales guidance.
Johnson & Johnson pulled in $24.75 billion in revenue for the period that ended March 31st. The company’s revenue is higher than the $23.67 billion analysts expected. Commenting on the quarterly performance, the company’s Chairman of the Board and Chief Executive Officer Joaquin Duato said:
“Our first quarter results demonstrate strong performance across all three segments of our business and reflect the dedication of Johnson & Johnson colleagues around the world. With this momentum, I look forward to the remainder of the year, one filled with exciting catalysts that will create both near- and long-term value for patients and all of our stakeholders.”
For Q1 2023, J&J also realized earnings per share (EPS) of $2.68 adjusted versus the $2.50 consensus estimate.