Johnson & Johnson’s consumer health company Kenvue is expected to go public this week, marking its biggest deal since late 2021.
Kenvue is the mother of a variety of well-known brands, including Tylenol, Listerine, Band-Aid, Neutrogena and Nicorette.
“With over $2 billion in cash flow and a healthy 3.7% dividend, this is exactly the kind of business that thrives in a tough environment,” said Bill Smith, Renaissance Capital’s co-founder and chief executive officer of institutional research and IPO offering exchange traded funds.
The deal is expected to raise $3.3 billion, “which would more than double the year-to-date total proceeds from the IPO,” he said in a market drought.
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Only 40 IPOs have been rated so far this year, although that represents a 54% increase from the same time last year when the market was frozen. According to Renaissance data, total revenue is $2.4 billion, down 14% year over year.
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kenvue
KVUE
plans to offer 151.2 million shares at a price of $20 to $23 apiece, according to the IPO documents. With an expected 1.87 billion shares outstanding upon closing, it would have a valuation of $43 billion at the top of that range.
The company plans to list on the New York Stock Exchange under the ticker “KVUE”. Goldman Sachs, JPMorgan and BofA Securities are lead underwriters in a team of 19 banks working on the transaction.
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Proceeds will be used for general purposes while the company retains $1.17 billion in cash and cash equivalents.
Kenvue is profitable, posting pro forma net income of $1.46 billion on total revenues of $14.95 billion for the year ended January 1. For the first quarter ended April 3, it reported net income of $528 million on sales of $3.590 billion, according to the filing documents.
One of the risks highlighted in the IPO filing relates to the litigation J&J is facing
JNJ
about its talc-based powders. The company posted a loss in the first quarter as it booked a one-time charge of $6.9 billion related to lawsuits filed by people alleging that the company’s talc powders cause cancer, asbestos poisoning and other diseases . The company has offered to pay at least $8.9 billion to settle the lawsuits and eliminate an overhang in the stock.
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J&J assumes all talk-related liabilities for products sold in the US and Canada, while Kenvue covers products sold abroad.
J&J will continue to own about 90% of the company and plans to distribute the remaining shares to its own shareholders in a transaction that may materialize in the second half.
Kenvue is expected to be followed by the largest biotech IPO in nearly two years this week, when Acelyrin
SLRN
comes to market according to Renaissance.
The inflammatory disease company plans to raise $350 million through the sale of 20.6 million shares for a price of $16-$18 with a market cap of $1.5 billion to become the world’s largest biotech Mark deal since June 2021.
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The Company’s lead product candidate, Izokibep, is in Phase 2b/3 studies for the treatment of hidradenitis suppurativa, psoriatic arthritis and uveitis, all painful and debilitating conditions.
The company plans to list on the Nasdaq under the ticker “SLRN”. Morgan Stanley, Jefferies, TD Cowen and Piper Sandler are the joint bookrunners of the deal.
The Renaissance IPO ETF
initial public offering
is up 12.9% year to date, while the S&P 500
SPX
has gained 8.9%.
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