Kenvue, the consumer health business spun out by Johnson & Johnson earlier this year, is set to see a reduction of at least 80% in Johnson & Johnson’s stake through a stock exchange offer. The company currently owns 89.6% of Kenvue’s common stock, which amounts to over 1.72 billion shares.
The exchange offer, also known as a split-off, allows Johnson & Johnson shareholders to exchange all or a portion of their shares for Kenvue’s common stock at a 7% discount. The offer is expected to be tax-free. The split-off is voluntary for investors and is scheduled to close on August 18, much earlier than anticipated.
Johnson & Johnson received a waiver that removes the share lockup period associated with Kenvue’s initial public offering in May. This means that Johnson & Johnson can sell its shares without waiting for the usual 180-day lockup period.
“We believe now is the right time to distribute our Kenvue shares, and we are confident that a split-off is the appropriate path forward to bring value to our shareholders,” said J&J CEO Joaquin Duato. This move will allow Johnson & Johnson to focus on its pharmaceutical and medtech businesses, which contributed to the company’s strong second-quarter revenue and adjusted earnings.
Shares of Johnson & Johnson rose about 1% in premarket trading, while shares of Kenvue fell nearly 3%. The announcement of the exchange offer had a negative impact on Kenvue’s shares, despite the company’s positive second-quarter results.
Kenvue CEO Thibaut Mongon expressed satisfaction with the response to the IPO, stating that the company is ready to operate as a fully independent entity.
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