The IPO Buzz: J&J’s Kenvue Launches $3.3 Billion IPO

This is huge. Kenvue Inc. (KVUE proposed), Johnson & Johnson’s consumer health company, whose brands include Tylenol and Band-Aid, filed terms for its IPO – 151.2 million shares (151,204,000 shares)  at $20.00 to $23.00 – after the closing bell today (Monday, April 24, 2023.) Kenvue’s IPO would raise $3.3 billion ($3.25 billion) – if the deal is priced at the $21.50 mid-point. The IPO is set for pricing next week.

The news raised 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. Let that sink in. (The Wall Street Journal reported that traditional IPOs priced so far in 2023 have raised about $2.3 billion, according to Dealogic data.)

Some are calling Kenvue a $4 billion IPO. That figure is essentially rounding up the $3.48 billion in proceeds that the IPO would raise if it’s priced at $23 – the top of its range.

The IPO’s terms give Kenvue a market capitalization of $40.15 billion, assuming pricing at the $21.50 mid-point. 

Kenvue launched the IPO on Monday. That fact confirmed an exclusive story in The Wall Street Journal – published Sunday evening (April 23, 2023) –  that Kenvue Inc. planned to start meeting with IPO investors as soon as today (Monday, April 24, 2023)

A Squadron of Big Banks

Goldman Sachs and J.P. Morgan – the leaders of Kenvue’s team of nine joint book-runners – set the IPO’s pricing date for Thursday night, May 4, to trade Friday, May 5, on the New York Stock Exchange.

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

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.

If it takes a village to raise a child, it takes a squadron of investment bankers to move the merch in a $3.3 billion IPO.

Kenvue, based in Skillman, N.J.,  is known for its consumer brands. Its products include household names like Band-Aid, Tylenol, Neutrogena, Listerine and Johnson’s Baby Powder.

Some may see a connection between the timing of Kenvue’s IPO launch and recent developments involving efforts by Johnson & Johnson (JNJ), Kenvue’s parent, to settle litigation over Johnson’s Baby Powder.

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 temporarily halted about 38,000 talc lawsuits consolidated in a federal district court in New Jersey in a ruling last week, 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.

IPO investors hope that Kenvue’s IPO will be like a turbo-charged Vitamin B12 shot for the IPO market – and not just a Band-Aid.

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.