Shares in Johnson & Johnson
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Consumer health subsidiary Kenvue jumped 17% as it began trading in the public markets Thursday afternoon, marking a strong start for the newly independent company.
In a sign that insurance companies were sensing an appetite for Kenvue shares among investors, shares were priced Wednesday night at $22. That’s the high end of the $20-23 IPO range that was noted earlier, and underwriters said they would offer more shares than expected.
With the midday trading beginning Thursday, shares quickly jumped to $25.74. Price means the $48.6 billion market capitalization of Kenvue, the essential drug seller.
Kenvue and Johnson & Johnson (stock ticker: JNJ) have offered 173 million shares of Kenvue, and are giving the underwriters the option to buy another 26 million shares.
Johnson & Johnson will own 90.9% of Kenvue after completing the IPO. The company will eventually distribute those shares to its shareholders.
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Kenvue is traded on the New York Stock Exchange under the ticker KVUE. The new company sells some of the most popular consumer health brands in the world, including Tylenol, Motrin, Benadryl, Band-Aid, Zyrtec, and Neutrogena. last week, Barron He argued that investors should buy Kenvue shares, calling the valuation “relatively cheap”.
The initial public offering will raise $3.8 billion, which Kenvey said in a securities filing it would pay Johnson & Johnson. The timing of Johnson & Johnson’s distribution of Kenvue stock to its shareholders is unclear; According to a Kenvue regulatory filing, the company will need permission from its underwriters to make the distribution in less than 180 days.
Kenvue joins competitor Haleon (HLN) as the generic-branded consumer health company. Haleon, which went public last year, was previously a joint venture between GSK (GSK) and Pfizer (PFE). They sell Sensodyne, Centrum, Flonase, Advil, Panadol, and a long list of other major brands. Before last year, consumer health products were generally tucked into the portfolios of big pharma, or consumer products giants like Procter & Gamble (PG).
Johnson & Johnson’s IPO leaves its pharmaceutical and medical device business. Johnson & Johnson was among the last major drug companies to adhere to the conglomerate model, while peers such as Eli Lilly
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(LLY), Pfizer, and GSK have divested all but the core biopharmaceutical businesses.
Kenvue’s IPO may be the largest so far of the year, though it likely won’t signal any broad shift in investor appetite for IPOs.
Write to Josh Nathan Kazis at [email protected]
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