Kimberly-Clark to buy Tylenol maker Kenvue for over $52b
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Kenvue is facing looming litigations against Tylenol, as well as claims its baby powder products cause cancer.
PHOTO: REUTERS
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NEW YORK – Kleenex maker Kimberly-Clark said on Nov 3 it will buy Kenvue for more than US$40 billion (S$52 billion) in a landmark deal for the consumer sector, as the Tylenol maker grapples with White House scrutiny and choppy demand.
Kenvue’s shareholders will get US$21.01 per share in cash and stock, implying a hefty 46.2 per cent premium to the stock’s last closing price.
Kimberly Clark would be scooping up the former Johnson & Johnson unit after months of struggles by Kenvue that include the ouster of its CEO in July and a share slump when President Donald Trump in September asserted that Tylenol use can lead to autism
US Health and Human Services Secretary Robert F. Kennedy Jr has acknowledged that there is no evidence proving Tylenol causes autism, but repeated his view that signs of a link between the two are “very suggestive”.
Apart from certain looming litigations against Tylenol
Still, Kimberly-Clark expects about US$2.1 billion in annual cost savings from the acquisition, which it expects to close in the second half of 2026.
Set to be the largest buyout in the US consumer goods sector to date, the merger will give Kimberly-Clark access to Kenvue’s vast portfolio of brands from Listerine mouth wash and Band-Aid to skincare names like Aveeno and Neutrogena, with the combined company expected to bring in annual revenues of roughly US$32 billion.
Deal timing
The timing of the deal, although probable, was earlier than expected, given the negative litigation and regulatory headlines around Kenvue, RBC Capital Markets analyst Nik Modi said.
“We believe Kimberly-Clark’s capabilities are evolved versus Kenvue, which should help improve brand performance,” Mr Modi said, adding that it will take investors some time to process the long-term implications.
Sources in June told Reuters the strategic review of Kenvue’s operations could include a sale or breakup of the company that was spun off from healthcare conglomerate Johnson & Johnson in 2023.
Kimberly-Clark is also navigating a consumer goods environment increasingly fraught with a more value-seeking shopper, forcing companies, including sector bellwether Procter & Gamble, to invest in smaller pack sizes and trim underperforming business units.
Kimberly-Clark sold a majority stake in its international tissue business to Brazilian pulp maker Suzano as part of a restructuring, proceeds from which are expected to help the Kenvue buyout, the company said on Nov 3.
Kenvue’s shareholders will receive US$3.50 per share and 0.15 Kimberly-Clark share for each Kenvue share held. That implies an equity value of US$40.32 billion, according to Reuters calculations.
Either party may be required to pay a US$1.12 billion termination fee in cash if the deal falls through, according to a regulatory filing.
Upon closing, Kimberly-Clark’s CEO Mike Hsu will take over as the top boss and chairman of the combined company.
Kimberly-Clark said it received committed financing from JPMorgan Chase Bank, and that it expects to fund Kenvue’s purchase through a mix of cash and debt. REUTERS
