Kimberly-Clark to acquire Johnson & Johnson’s Kenvue for US$48.7B in consumer health deal

USA—Kimberly-Clark has struck a major deal to acquire Kenvue, the consumer health spinout from Johnson & Johnson, in a transaction valued at US$48.7 billion.

This acquisition aims to create a powerful consumer health group expected to generate annual revenues of about US$32 billion.

However, the deal raises concerns, particularly around Kenvue’s flagship product, Tylenol, and ongoing talc-related legal issues outside the U.S. and Canada.

Tylenol is currently facing challenges due to controversial claims made by President Donald Trump, who falsely linked the pain reliever to autism risk when used during pregnancy.

Additionally, Kenvue is disputing a petition urging the FDA to add a warning label that pregnant women using Tylenol may increase the risk of developmental problems in their children.

Kimberly-Clark’s CEO, Mike Hsu, addressed these risks during a conference call, emphasizing the thorough review process the company undertook.

He explained that the board examined both potential risks and opportunities, consulting leading scientific, medical, regulatory, and legal experts on multiple occasions.

Hsu described the deal as a significant opportunity for long-term value creation for both companies.

Meanwhile, Kirk Perry, CEO of Kenvue, expressed confidence in the safety of their products, standing firmly behind the science supporting them.

Under the terms of the acquisition, Kenvue shareholders will receive $3.50 per share plus 0.14625 Kimberly-Clark shares for each Kenvue share they hold at closing.

Kimberly-Clark shares closed at a price that brings the total compensation to $21.01 per Kenvue share, valuing the company at around US$48.7 billion.

Once the deal closes, expected in the second half of next year, Kimberly-Clark shareholders will own approximately 54% of the combined company, while Kenvue shareholders will hold about 46%.

On the day of the announcement, Kenvue’s stock rose 15%, while Kimberly-Clark’s shares fell 13%.

The transaction reverses Kenvue’s recent decline, as its share price had dropped 33% this year.

Kenvue has experienced a turbulent year, with investor activism and a leadership change from Thibaut Mongon to Kirk Perry in July.

On the same day the CEO transition was announced, the company also reported a 4% drop in second-quarter sales but withheld its third-quarter results during Monday’s announcement.

The merger brings together Kimberly-Clark’s well-known brands, such as Huggies, Kleenex, and Depend, with Kenvue’s portfolio, which includes Tylenol, Aveeno, Band-Aid, Listerine, and Neutrogena.

Kimberly-Clark projects US$2.1 billion in synergies from the deal and expects the acquisition to boost its adjusted earnings per share by the second year post-close.

Hsu highlighted that the acquisition was a deliberate strategic move, describing Kenvue as “the belle of the ball” because of its strong brand lineup and capabilities.

Sign up HERE to receive our email newsletters with the latest news and insights from Africa and beyond. Also, follow us on our WhatsApp channel for updates.