Medical devices company Johnson & Johnson (NYSE: JNJ) announced an exchange offer to initiate the separation of its Kenvue (KVUE) business, formerly JNJ’s Consumer Health business, and will split off at least 80.1% of Kenvue shares. Kenvue completed its IPO earlier this year.
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Through this exchange offer, Johnson & Johnson shareholders can exchange all, some, or none of their shares for shares of Kenvue at a discount of 7% and will be subjected to an upper limit of 8.0549 shares of Kenvue common stock per share of JNJ common stock tendered and accepted in the exchange offer. If this upper limit is not in effect, shareholders tendering their JNJ shares are likely to receive around $107.53 of Kenvue common stock for every $100 of common stock tendered. This exchange offer is expected to be “tax-free for U.S. Federal income tax purposes.”
Joaquin Duato, Chairman and CEO of Johnson & Johnson commented, “The separation of Kenvue further sharpens Johnson & Johnson’s focus on transformational innovation, specifically in Pharmaceutical and MedTech. We believe now is the right time to distribute our Kenvue shares, and we are confident that a split-off is the appropriate path forward to bring value to our shareholders.”
Overall, analysts are cautiously optimistic about JNJ stock, with a Moderate Buy consensus rating based on three Buys and six Holds.
