The IPO Buzz: Kenvue (KVUE) Kicks Off May with $3.3B IPO – Biggest U.S. IPO of the Year

Fast start for May: Kenvue Inc. (KVUE proposed) stepped on the accelerator and moved up the pricing  date of its $3.3 billion IPO before the opening bell today (Monday, May 1, 2023). The blockbuster IPO – the biggest deal of the year so far – is set for pricing Wednesday night (May 3, 2023) to trade Thursday (May 4, 2023) on the New York Stock Exchange.

In addition to Goldman Sachs and J.P. Morgan, the joint book-runners for Kenvue’s IPO include BofA Securities, Citigroup, Deutsche Bank Securities, BNP Paribas, HSBC, RBC Capital Markets and UBS Investment Bank.

Meanwhile, late-stage biotech Acelyrin Inc. (SLRN proposed) launched its IPO today – 20.6 million shares at $16.00 to $18.00 to raise $350.2 million. The IPO’s terms were disclosed shortly after sunrise today. Acelyrin is expected to price its IPO on Thursday night (May 4) to trade Friday (May 5, 2023) on the NASDAQ.

Acelyrin’s leading drug candidate is in clinical trials for evaluation to treat inflammatory diseases, including uveitis, an inflammation of the eye.

Morgan Stanley, Jefferies, TD Cowen and Piper Sandler are the joint book-runners of Acelyrin’s IPO.

Johnson & Johnson (JNJ) is spinning off Kenvue, its consumer health company. Its brands include household names like Band-Aid, Tylenol, Neutrogena, Listerine and Johnson’s Baby Powder.

“It’s the first high-profile IPO we’ve seen in a long time,” a seasoned IPO pro says.

The deal is raising IPO investors’ hopes that the IPO market is back in business. Wall Street has not had a $100 million-plus IPO in play since March 9, when Atlas Energy Solutions Inc. (AESI) made its NYSE debut.

At $3.3 billion, Kenvue’s IPO exceeds by $1 billion the total dollar volume of this year’s traditional IPOs. (The Wall Street Journal reported that traditional IPOs priced so far in 2023 have raised about $2.3 billion, according to Dealogic data.)

Kenvue launched the IPO a week ago today (Monday, April 24, 2023).

The prospectus lists 10 investment banks as co-managers: BBVA, INT, IMI-Intesa Sanpaolo, Santander, UniCredit Capital Markets, Academy Securities, Independence Point Securities, Ramirez & Co. Inc., R. Seelaus & Co. and Siebert Williams Shank.

There’s some concern about Kenvue being named in a Johnson’s Baby Power talc lawsuit last week.

Three weeks ago, Johnson & Johnson said it had agreed to pay $8.9 billion to settle thousands of lawsuits in which the plaintiffs said their use of talc-containing Johnson’s Baby Powder had caused ovarian cancer, The Wall Street Journal reported.

U.S. Bankruptcy Judge Michael Kaplan has temporarily halted about 38,000 talc lawsuits consolidated in a federal district court in New Jersey, Reuters reported on Thursday, April 20, 2023. The Reuters story noted:  “The judge said he would revisit the ruling in late May.”

Johnson & Johnson says talc is safe and it does not cause cancer.

Kenvue’s amended prospectus, page 103, says:

“On August 11, 2022, we announced the commercial decision to transition to an all cornstarch-based baby powder portfolio. As a result of this transition, talc-based Johnson’s Baby Powder will be discontinued globally in 2023. Talc-based Johnson’s Baby Powder was previously discontinued during 2020 in certain markets including the United States and Canada. We do not expect the impact of this change to be material.”

After the IPO, Johnson & Johnson (JNJ) will still control Kenvue through its ownership of 91.9 percent of the voting power of Kenvue’s outstanding stock, according to the prospectus.

Stay tuned.

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Disclosure: Nobody on the staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The staff does not issue advice, recommendations or opinions.

Disclaimer: A SCOOP Rating (Wall Street Consensus of Opening-day Premiums) is a general consensus taken, at press time, from Wall Street and investment professionals concerning how well an IPO might perform when it starts trading. The SCOOP Rating does not reflect the opinions of anyone associated with The SCOOP ratings should not be taken as investment advice. The rating merely reflects the opinion of the professionals at the time of publication and is subject to last-minute changes due to market conditions, changes in a specific offering and other factors, such as changes in the proposed offering terms and the shifting of investor interest in the IPO. The information offered is taken from sources we believe to be reliable, but we cannot guarantee the accuracy.