J&J broadcasts IPO costs for shopper spinoff Kenvue

Johnson & Johnson products for sale in New York.

Scott Mill | CNBC

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

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

J&J said it has started a roadshow for an initial public offering of more than 151 million common shares. Kenvue plans to meet with potential investors as early as Monday, sources familiar with the matter told The Wall Street Journal.

Kenvue estimates the IPO will generate approximately $3.15 million in net proceeds, the filing said. These proceeds and any profits from related debt financing transactions will go to J&J.

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

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

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

The company announced that it will own 1.7 billion common shares of Kenvue after the IPO, representing 91.9% of the spin-off’s total shares. Last year, J&J said it would reduce the remainder of its stake in Kenvue later this year.

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

J&J’s consumer health business makes plasters, Listerine mouthwash, skin care products under the Neutrogena and Aveeno brands, pain reliever Tylenol and baby powder of the same name.

In 2022 alone, the unit had net sales of $15 billion. In the first quarter of 2023, the company generated sales of $3.8 billion. That represents growth of more than 7% 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 global chairman 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 Kenvue’s CFO before the offer closes.