Kenvue Inc., the consumer health business of Johnson & Johnson, climbed from its initial public offering price during Thursday’s debut session — breaking a lull in large US listings that’s lasted for more than a year.
(Bloomberg) — Kenvue Inc., the consumer health business of Johnson & Johnson, climbed from its initial public offering price during Thursday’s debut session — breaking a lull in large US listings that’s lasted for more than a year.
The maker of brands including Tylenol, Band-Aid, Listerine and Nicorette rose 22% from the $22 offering price in its first day of trading. Kenvue’s $3.8 billion IPO was the biggest in New York since Rivian Automotive Inc. in November 2021 due to five quarters of volatility and interest-rate uncertainty that stalled most deals in the pipeline.
The IPO valued Kenvue at about $42 billion, according to Bloomberg Intelligence analyst Diana Gomes. Kenvue marketed the shares at $20 to $23 through a syndicate led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Bank of America Corp.
Read More: Kenvue Opens Clogged IPO Pipeline as Peers Keep Beating Market
Kenvue’s products include dozens of J&J household names, such as Neutrogena, Aveeno and Benadryl. On a pro forma basis, the business had net income of about $1.5 billion on sales of almost $15 billion for the year ended Jan. 1, according to company filings.
“We are extremely well positioned, as Kenvue, to start a new chapter as a publicly trade company. We have a great portfolio,” Chief Executive Officer Thibaut Mongon said during an interview. He said the company would consider acquisitions, but is looking to its current products and brands for growth.
“We are laser-focused on organic growth,” Mongon said. “Having said that, we have the proven track record of identifying brands in attractive territories outside” and buying them, he said.
J&J is retaining the majority share of Skillman, New Jersey-based Kenvue. While the company does business globally, North America accounts for half of its sales. While there’s been concern about consumers pulling back spending in the US, the latest earnings reports from peers including Procter & Gamble Co. and Kimberly-Clark Corp. show that Americans are still willing to pay higher prices for household essentials.
Mongon said the company didn’t see any declines in its volumes last year, and that first-quarter revenue growth came from increases in both prices and volumes.
What Bloomberg Intelligence Says
“Johnson & Johnson’s spinoff of its consumer health brand segment, Kenvue, will likely be good for the health-care giant, but it’s unclear if it will be good for the stand-alone Kenvue. The new company will be left indebted and under a tax audit. Also, one of its most valuable assets, goodwill, has fallen 11% since 2021.”
— Wendy Soong, senior associate strategy analyst
Regarding innovation, he gave the example of Neutrogena’s sunscreens that don’t leave behind a white residue, noting that Kenvue is expanding the line this year with a serum in addition to the lotion.
“People don’t like having the perception of white residue on their skin,” Mongon said. “It’s a great example of identifying what prevents consumers from getting the care they need for themselves, and addressing it through innovation.”
–With assistance from John J. Edwards III.
(Updates with the close of trading in the second paragraph. A prior update added CEO comments starting in fifth paragraph.)
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