Kimberly-Clark is set to acquire Kenvue, the producer of Tylenol, in a transaction valued at approximately $48.7 billion, consisting of both cash and stock. This merger will form a powerhouse in the consumer health goods sector.
In the newly merged entity, Kimberly-Clark’s shareholders will hold a 54% majority stake, while Kenvue’s shareholders will possess around 46% of the company.
The merger will bring a diverse array of well-known household brands under one umbrella, combining Kenvue’s products like Listerine mouthwash and Band-Aid with Kimberly-Clark’s offerings such as Cottonelle toilet paper, Huggies diapers, and Kleenex tissues. Together, the new company is expected to achieve an annual revenue of about $32 billion.
Kenvue has only recently been operating independently, having been spun off from Johnson & Johnson just two years ago. Johnson & Johnson initially revealed plans to separate its consumer health division from its pharmaceutical and medical device sectors in late 2021.
This agreement, announced on Monday, ranks among the most significant corporate acquisitions of the year.
Last month, Kenvue captured national attention when Health Secretary Robert F. Kennedy, Jr. reignited discussions about the unverified connection between the use of Tylenol and autism, suggesting that those who challenge this theory do so out of animosity towards former President Donald Trump.
During a meeting with Trump and the Cabinet, Kennedy reiterated the connection, even while noting there was no medical proof to substantiate the claim.
In July Kenvue, announced that CEO Thibaut Mongon was leaving in the midst of a strategic review with the company under mounting pressure from activist investors. Board member Kirk Perry is serving as interim CEO.
“We will serve billions of consumers across every stage of life,” Kimberly-Clark Chairman and CEO Mike Hsu said in a statement.
Hsu will be chairman and CEO of the combined company. Three members of the Kenvue’s board will join Kimberly-Clark’s board at closing. The combined company will keep Kimberly-Clark’s headquarters in Irving, Texas and continue to have a significant presence in Kenvue’s locations.
The deal is expected to close in the second half of next year. It still needs approval from shareholders of both both companies.
Kenvue shareholders will receive $3.50 per share in cash and 0.14625 Kimberly-Clark shares for each Kenvue share held at closing. That amounts to $21.01 per share, based on the closing price of Kimberly-Clark shares on Friday.
Kimberly-Clark and Kenvue said that they identified about $1.9 billion in cost savings that are expected in the first three years after the transaction’s closing.
Shares of Kimberly-Clark slipped more than 15% before the market open, while Kenvue’s stock jumped more than 20%.
