Johnson & Johnson Fully Exits Kenvue with $3.75 Billion Share Sale, Completing Consumer Health Spin-off

May 15, 2024 00:15 CST Updated 00:16

Kenvue

Consumer Health Product Developer

Johnson & Johnson

Healthcare Product Manufacturers, Health Service Providers

This Monday, Kenvue (stock code: KVUE.US) announced significant news that Johnson & Johnson (stock code: JNJ.US) will clear its debt held by Goldman Sachs and JPMorgan Chase (collectively referred to as "selling shareholders") through a stock-and-debt swap and hand over its stake in Kenvue (NYSE：KVUE) The remaining 9.5% of the shares.

Based on Kenvue's recent closing price,This transaction is valued at approximately $3.75 billion (RMB 27.1 billion).. After the completion of this transaction, Johnson & Johnson willNo Longer HeldAny common stock of Kenvue, marking the full independence of Kenvue.

# Kenvue's Brilliant Transformation

Kenvue, the consumer health business spun off from Johnson & Johnson, has carved out a significant position in the personal health products sector with its extensive product portfolio and strong brand influence.

From self-care to skin health and beauty, Kenvue's business covers multiple aspects of consumers' daily needs. It owns many well-known brands such as Tylenol, Neutrogena, Band-Aid, Aveeno, and Listerine, which are deeply loved by consumers worldwide.

Since Johnson & Johnson announced the spin-off of its consumer health business in November 2021, Kenvue has embarked on a path of independent development. In September 2022, the name Kenvue was officially unveiled, symbolizing the company's deep understanding and expertise in consumer needs. In May 2023, Kenvue successfully went public on the New York Stock Exchange, raising a total of $3.8 billion, becoming one of the highlights in the U.S. stock market in recent years.

# Johnson & Johnson's Continuous Reduction in Holdings Brings Significant Changes to Kenvue's Share Structure

In fact, Johnson & Johnson's reduction in its stake in Kenvue is not the first time.

When Kenvue made its debut on the capital market in May 2023,ZengKenvue Inc. has become one of the largest IPOs in U.S. history by issuing 172.8 million shares of common stock in a massive offering.Johnson & Johnson once held up to 90% of its shares.

However, by the end of July the same year, Johnson & Johnson initiated a stock exchange program, allowing its shareholders to convert their Johnson & Johnson shares into Kenvue Inc.'s common stock. This program eventually led Johnson & Johnson to exchange 190 million of its common shares for 1.5 billion shares of Kenvue Inc.'s common stock.

Through this series of stock exchanges, Johnson & Johnson successfully spun off Kenvue.Envue holds at least 80.1% of the shares, retaining only approximately 9.5% of Kenvue's common stock.Notably, with the completion of this transaction, Johnson & Johnson will fully divest its stake in Kenvue and no longer hold any shares.

# Kenvue's Remarkable Transformation, Performance on the Rise

On May 7, 2024, Kenvue released its first-quarter financial report for the period ending March 31, 2024. The report showed that the company achieved solid performance this quarter.Net sales reached $3.894 billion (approximately RMB 28.136 billion), exceeding market expectations of $3.79 billion, with a year-on-year increase of 1.1%.。

KenvueThe growth in net sales was mainly driven by strong consumer demand, particularly the continued growth of oral care products under the personal care and essential health businesses. However, the poor performance of the skin health and beauty business partially offset the overall growth. Despite challenges,Kenvue's net profit still reached 296 million U.S. dollars, increasing by 7.6% year-on-year。

Kenvue's business mainly includes three major segments: personal care, basic health, and skin health and beauty. It owns well-known brands such as Listerine, Band-Aid, Neutrogena, Tylenol, Aveeno, Johnson's Baby, and Dr. Ci:Labo.

From the performance of the business department:

Personal care business revenue increased by 3.5% year-over-year to US$1.698 billion (approximately RMB12.269 billion);
Basic health business revenue increased by 3.7% year-over-year to $11.42 billion (approximately RMB 8.251 billion);
Revenue from skin health and beauty business decreased by 5.1% year-on-year to US$1.054 billion (approximately RMB 7.616 billion).

# Business Reorganization and Layoffs

On Kenvue's path to independent development, a series of business reorganizations and layoff plans have become inevitable steps. Recently,Kenvue Announces Global Layoff Plan, Expected to Cut 4% of Workforce, which follows another round of layoffs earlier this year in New Jersey and California.

Currently, Kenvue has approximately 23,000 employees, and this round of layoffs may affect nearly920Employee.

The reasons behind the layoff plan are multifaceted. First, as Kenvue's "Transition Services Agreement" (TSA) with Johnson & Johnson is about to expire, the company needs to operate and manage more independently. Second, in order to achieve cost reduction and efficiency enhancement, Kenvue plans to realize $350 million in annual pre-tax cost savings by 2026. However, the layoff plan also comes with high costs. According to Kenvue,The costs associated with this round of layoffs are as high as $275 million.。

This series of layoffs reflects Johnson & Johnson's accelerating pace of business restructuring and the increasingly clear boundaries between its different subsidiaries. In September last year, Johnson & Johnson updated its iconic logo, adopting a more modern font and a bolder red tone.

This change is not only for a visual refresh but also reflects the company's new development direction and strategic adjustments. In particular,Johnson & Johnson applies the new logo to itsMedical DeviceAndPharmaceuticalsBusiness, while the consumer health business retains the original logo. This distinction further confirms Johnson & Johnson's long-term strategy to focus on the development of innovative medicine and medical technology in the future.

# Johnson & JohnsonRevenue Grows Steadily, Diversified Strategic Layout Upgraded Again

On April 17, 2024, Johnson & Johnson announced its Q1 financial report for the fiscal year 2024, with total revenue$21.383 billion (approximately RMB 154.789 billion)`, year-on-year`Increase by 2.3%,Net profit was US$5.354 billion,Exceeded Wall Street's previous expectations.

Among them,Medical Technology Business Revenue of $7.821 Billion, a Year-on-Year Increase of 4.5%. Subordinate toSurgical business sales were $2.416 billion, a year-on-year increase of 0.7%;Orthopedic sales were $2.34 billion, representing a year-over-year increase of 4.3%;Cardiovascular business sales were $1.806 billion, a year-on-year increase of 20.2%;Vision business sales reached $1.258 billion, representing a year-over-year increase of 3.3%.

Latest Department Updates

1. Acquisition and Cooperation:

March 2024,Johnson & Johnson Announces Plans to Collaborate with NVIDIA to Expand AI Applications in SurgeryAt that time, Johnson & Johnson can obtain the usage rights of Nvidia's IGX edge computing platform and Holoscan edge AI platform.The two parties will also cooperate on AI technology in areas such as medical imaging and disease diagnosis.
U.S. time on April 5, 2024, Johnson & Johnson announced that it has agreed to...$13.1 Billion Acquisition of Shockwave Medical (Nasdaq:SWAV), the latter being a manufacturer of Intravascular Lithotripsy (IVL) technology. (Review:Big Move! $94.8 Billion Mega Acquisition!)

2. Supervision:

In March 2024, Biosense Webster, a subsidiary of Johnson & Johnson, announced itsFirst PFA Product Varipulse Pulse Ablation PFA Receives CE Approval for Market Launch. And has already submitted an application to the U.S. FDA.
In March 2024, the FDA requested that Ambiomed, a subsidiary of Johnson & Johnson, recall certain models of the Impella series of interventional heart pumps.

3. Data and Products:

In March 2024, Biosense Webster announced the start ofFirst Application of Investigational Left Atrial Appendage Exclusion (LAAX) System in Non-Valvular Atrial Fibrillation (NVAF) Patient.(Review:World's First! Johnson & Johnson's Left Atrial Appendage Closure System Successfully Applied)
In April 2024, Johnson & Johnson showcased new technological advancements in its spinal product portfolio, including itsLatest Innovative Product: TriALTIS Spinal System.(Review:Details Revealed! Johnson & Johnson's New Spinal Screw System)
At the same time, Johnson & Johnson announced a project aboutTHERMOCOL SMARTTOUCH SF Dual-Energy Ablation Catheter First Clinical Study(SmartfIRE) The results showed that the acute success rate of the dual-energy ablation catheter was 100%.(Review:100% Acute Success Rate! Dual-Energy Ablation Catheter)

With the full divestiture of Kenvue, Johnson & Johnson will refocus on its core business and plan its future commercial landscape.This historic and ever-exploring company will continueContinue to uphold a diversified development strategy, ensuring comprehensive business growth through acquisitions, expansions, and reorganizations.

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