Kimberly-Clark to buy Tylenol maker Kenvue for $40bn

Kimberly-Clark is laying down $40bn to bargain Kenvue successful a monolithic woody that has puzzled immoderate investors, arsenic the shaper of Tylenol struggles with anemic sales, lawsuits and White House attacks linking its painkiller to autism.

Shares of Kimberly-Clark dropped sharply aft the Monday announcement arsenic stockholders scrutinised the 46 percent premium being paid for the erstwhile Johnson & Johnson portion that has had a turbulent year.

Recommended Stories

• list 1 of 4How volition ‘limited’ US atomic tests debar immoderate explosions?
• list 2 of 4Key takeaways from Trump’s 60 Minutes interview
• list 3 of 4What the latest polls are showing successful the Mamdani vs Cuomo NYC mayoral race
• list 4 of 4OpenAI, Amazon motion $38bn AI deal

Kenvue ousted its CEO successful July, and has been nether occurrence from United States President Donald Trump implicit unproven claims that Tylenol usage during gestation tin origin autism successful children.

Kenvue shares, which had dropped sharply since Trump’s comments, jumped 17.5 percent connected Monday. Many investors person been awaiting a merchantability of each oregon parts of the institution for months, pursuing activistic pressure.

Jay Woods, main marketplace strategist astatine Freedom Capital Markets, said the marketplace absorption suggests some investors believe Kimberly-Clark “may beryllium buying damaged goods”.

Despite the concerns, Kimberly-Clark forecast $2.1bn successful yearly outgo savings from the deal, with the summation of Kenvue’s immense portfolio of brands from Listerine mouthwash to skincare names similar Aveeno and Neutrogena expected to bring successful yearly revenues of astir $32bn for the combined company.

“Both companies beryllium broadside by broadside connected store shelves, truthful the standard and organisation logic marque consciousness adjacent if the Tylenol overhang remains a shadiness immoderate purchaser would alternatively avoid,” said Kimberly Forrest, main concern serviceman astatine Bokeh Capital Partners.

Tylenol headaches

“Kimberly-Clark volition instrumentality connected imaginable litigation hazard for the Tylenol brand… This is hard to quantify,” said TD Cowen expert Robert Moskow.

There are concerns around Kenvue’s potential ineligible vulnerability to hundreds of backstage lawsuits alleging the institution hid expected links betwixt Tylenol and autism oregon attraction shortage hyperactivity upset successful children.

While US Health and Human Services Secretary Robert F Kennedy Jr precocious said determination is nary conclusive grounds of specified a link, helium called existing information “very suggestive”.

US income of Tylenol fell 11 percent betwixt September 20 and October 4 aft Trump’s remarks, BNP Paribas expert Navann Ty said successful a enactment past month.

Kenvue is besides battling litigation tied to its talc-based babe pulverization products.

“Most investors expected Kenvue to merchantability disconnected prime brands, not the full company, fixed the Tylenol and talc overhangs. But Kimberly-Clark apt saw semipermanent worth successful a beardown marque portfolio trading astatine a steep discount,” said James Harlow, elder vice president astatine Novare Capital Management.

‘Awesome’ for Kenvue

Kenvue investors cheered the deal.

One semipermanent capitalist who has spoken with the committee and absorption implicit the past months called the woody “awesome”, portion some others said the terms was not arsenic bully arsenic they would person hoped for 2 months ago, earlier the institution came nether occurrence from the White House.

Kenvue has agelong struggled with weakness successful its halfway businesses, particularly the tegument wellness and quality segment, and has antecedently had capitalist activism. The institution said connected Monday that third-quarter income astatine the tegument wellness conception fell 3.2 percent to $1.04bn.

“One of our challenges astatine Kenvue close present is we’re surviving successful between, which is nary spot to unrecorded – successful the murky middle,” said Kirk Perry, who was named CEO of Kenvue earlier successful the day.

Sector struggles

Kimberly-Clark is besides navigating a user goods situation progressively fraught with a much value-seeking shopper – forcing companies, including assemblage bellwether Procter & Gamble, to put successful smaller battalion sizes and trim underperforming concern units.

It sold a bulk involvement successful its planetary insubstantial concern to Brazilian pulp shaper Suzano arsenic portion of a restructuring, proceeds from which are expected to assistance the Kenvue buyout, the institution said connected Monday.

Still, immoderate analysts said it reflects a changing woody environment. “This validates however easing complaint expectations are fueling large, transformational mergers,” Bokeh Capital’s Forrest said.

Going for implicit $40bn

Kenvue’s shareholders volition person $3.50 per stock and 0.15 Kimberly-Clark shares for each Kenvue stock held. That implies an equity worth of $40.32bn, according to calculations by the Reuters quality agency.

The deal, expected to adjacent successful the 2nd fractional of 2026, will beryllium financed done a premix of currency and debt, with committed backing from JPMorgan Chase Bank.

Either enactment whitethorn beryllium required to wage a $1.12bn termination interest successful currency if the woody falls through, according to a regulatory filing.

Upon closing, Kimberly-Clark’s CEO Mike Hsu volition instrumentality implicit arsenic the apical brag and president of the combined company.