Johnson & Johnson to price shares of consumer spinoff Kenvue at $20 to $23 in IPO

Johnson & Johnson products for sale in New York.

Scott Mlyn | CNBC

Johnson & Johnson will price shares of its consumer-health spinoff Kenvue at $20 to $23 in an initial public offering later this year, the company said in a regulatory filing Monday.

The spinoff, which would be valued at around $40 billion at that share range, could be the largest IPO in a subdued U.S. market for such offerings year to date.

J&J said it launched a roadshow for the IPO of more than 151 million shares of common stock. Kenvue plans to meet with prospective investors as early as Monday, sources familiar with the matter told The Wall Street Journal.

Kenvue estimates the IPO will generate net proceeds of around $3.15 million, the filing said. Those proceeds and any profits from related debt-financing transactions will go to J&J.

Goldman Sachs, JPMorgan Chase and Bank of America are the leading underwriters for the IPO, the company said in its preliminary prospectus filed with the Securities and Exchange Commission.

Kenvue expects to grant underwriters a 30-day option to purchase up to an additional 22.6 million shares of stock to cover any over-allotments, according to the filing.

J&J previously said it expects to complete the separation from Kenvue by mid- to late 2023.

The company noted it will own 1.7 billion shares of Kenvue’s common stock after the IPO, representing 91.9% of the spinoff’s total shares. Last year, J&J said it will reduce the rest of its stake in Kenvue later in the year.

Kenvue would trade on the New York Stock Exchange under the stock ticker KVUE.

J&J’s consumer-health business makes Band-Aid bandages, Listerine mouth wash, skin care products under the brand names Neutrogena and Aveeno, pain relief drug Tylenol and its namesake baby powder. 

The unit raked in $15 billion in net revenue in 2022 alone. During the first quarter of 2023, the business generated $3.8 billion in sales. That represents more than 7% growth over the same three-month period last year, according to J&J’s earnings report last week.

The company said it believes the business “empowers” about 1.2 billion people to “live healthier lives” every day.

Thibaut Mongon, J&J’s executive vice president and worldwide chair of consumer health, will serve as CEO and director of Kevnue prior to the completion of the IPO, the company said in the filing.

Paul Ruh, J&J’s chief financial officer of consumer health and a former PepsiCo executive, will become the CFO of Kenvue before the offering is completed.