Kenvue, the patron 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 value of $22 per share — barely above the center of its value vary, based on an individual acquainted with the main points. The inventory will start buying and selling on the New York Inventory Trade on Thursday.
The deal is the most important for the reason that IPO of electrical automobile 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 reminiscent of Tylenol painkillers, Listerine mouthwash and Aveeno skincare merchandise. It reported income of $15bn and professional forma internet earnings 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 brought about 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’t guarantee” buyers that the indemnity from its guardian could be ample, and additionally it is dealing with claims associated to gross sales in different international locations.
The US IPO market has been mired in certainly one of its longest slowdowns in a long time since early 2022 due to a mix of rising rates of interest, unstable inventory markets and pessimistic financial forecasts. Earlier than Wednesday’s deal, simply $2.4bn had been raised via conventional IPOs this 12 months, based on Dealogic knowledge.
Kenvue is uncommon amongst IPO candidates in that it’s worthwhile, backed by a big guardian group, and plans to pay a $1.5bn annual dividend. As such, most bankers don’t anticipate it to set off a direct surge in additional listings, however the deal is nonetheless being carefully watched throughout Wall Avenue as a take a look at of investor confidence.
“It’s fairly idiosyncratic, however . . . I believe it’s a superb signal,” stated 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 offer an extra take a look at for the beleaguered listings market within the coming days with the most important biotech IPO since June 2021. It’s trying to elevate 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.