Following Johnson & Johnson's divestment of its consumer healthcare division last year and subsequent reduction of holdings in the newly formed company, the healthcare conglomerate is now taking further steps to cut ties with Kenvue.
In a recent securities filing, Kenvue disclosed Johnson & Johnson's intention to completely exit its investment in the company. The plan involves offering 182.33 million shares of Kenvue to Goldman Sachs and J.P. Morgan Securities in exchange for debt. This "debt-for-equity" exchange is estimated to be valued at around $3.75 billion based on Kenvue's share price of $20.54 at the close of trading on Friday.
This development comes approximately a year after Kenvue's separation from Johnson & Johnson, transitioning into an independent consumer healthcare firm. Known for its popular products like Tylenol, Neutrogena, and Listerine, Kenvue reported revenues of $15.4 billion last year and employed 22,000 people. However, it is currently undergoing a cost-cutting initiative, aiming to eliminate hundreds of positions.
This latest move by Johnson & Johnson follows its previous reduction of Kenvue holdings through a share-exchange offer to its own investors last summer. Under that arrangement, shareholders had the opportunity to exchange their Johnson & Johnson shares for Kenvue shares.
In total, Johnson & Johnson offloaded 1.53 billion Kenvue shares in exchange for 191 million of its own shares. The recent offering covers Johnson & Johnson's remaining 9.5% stake in the consumer healthcare company. For Kenvue, this transaction comes shortly after announcing a workforce reduction of 4% as part of a cost-saving initiative aiming to achieve $350 million in annual savings by 2026. According to CFO Paul Ruh, these changes are geared towards enhancing Kenvue's competitiveness by adjusting its cost structure and operational practices.
