Johnson & Johnson consumer arm valued at $41bn in biggest US IPO since 2021

Kenvue, the buyer arm of healthcare large Johnson & Johnson, was valued at $41bn in an upsized preliminary public providing that marked the most important US itemizing in virtually 18 months.

The carved-out firm bought $3.7bn of inventory at a worth of $22 per share — barely above the center of its worth vary, in line with an individual aware of the small print. The inventory will start buying and selling on the New York Inventory Change on Thursday.

The deal is the biggest because the IPO of electrical car maker Rivian in November 2021, and alone will greater than double the sum raised in conventional US listings this 12 months.

Kenvue produces over-the-counter medicines and types akin to Tylenol painkillers, Listerine mouthwash and Aveeno skincare merchandise. It reported income of $15bn and professional forma internet revenue of $1.5bn in 2022.

It additionally produces J&J’s child powder merchandise, which have been on the centre of years of authorized battles over whether or not they induced most cancers, and the brand new firm has already been focused in lawsuits. J&J couldn’t be instantly reached for touch upon the Kenvue providing.

J&J, which is able to proceed to personal greater than 90 per cent of Kenvue’s shares, has agreed to protect it from any authorized prices associated to gross sales of child powder within the US and Canada. Nevertheless, Kenvue cautioned in its prospectus that it “can not guarantee” buyers that the indemnity from its dad or mum could be enough, and additionally it is going through claims associated to gross sales in different nations.

The US IPO market has been mired in considered one of its longest slowdowns in many years since early 2022 because of a mixture of rising rates of interest, risky inventory markets and pessimistic financial forecasts. Earlier than Wednesday’s deal, simply $2.4bn had been raised by conventional IPOs this 12 months, in line with Dealogic information.

Kenvue is uncommon amongst IPO candidates in that it’s worthwhile, backed by a big dad or mum group, and plans to pay a $1.5bn annual dividend. As such, most bankers don’t anticipate it to set off a right away surge in additional listings, however the deal is nonetheless being intently watched throughout Wall Avenue as a check of investor confidence.

“It’s fairly idiosyncratic, however . . . I believe it’s a very good signal,” mentioned a senior govt at a financial institution that didn’t work on the deal.

Goldman Sachs, JPMorgan Chase and Financial institution of America had been lead underwriters on the itemizing.

Inflammatory illness specialist Acelyrin is about to supply an extra check for the beleaguered listings market within the coming days with the biggest biotech IPO since June 2021. It’s seeking to increase as much as $477mn at a valuation of as much as $1.6bn.

The biotech sector has been significantly exhausting hit by the IPO freeze, as early-stage corporations depend on fairness gross sales to fund lengthy and costly drug developments.

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