Johnson & Johnson has announced its plans to split off a significant portion of the shares of Kenvue, the consumer-health business that was previously separated from the parent company earlier this year. The company intends to accomplish this through an exchange offer.
This decision by Johnson & Johnson, disclosed last week by company executives, had a negative impact on shares of Kenvue. Currently, Johnson still holds an 89.6% stake in Kenvue and is offering to exchange the majority of those shares for outstanding shares of Johnson in the proposed exchange offer.
Furthermore, Johnson announced on Monday that it has received a waiver of the 180-day share lock-up that was initially agreed upon as part of the Kenvue initial public offering.
As part of the planned exchange offer, Johnson shareholders will have the opportunity to trade their shares of Johnson for shares of Kenvue at a discounted price of 7%. Additionally, it is expected that this exchange offer will be tax-free for U.S. Federal income tax purposes.
Johnson CEO Joaquin Duato expressed confidence in the decision, stating, “We believe now is the right time to distribute our Kenvue shares, and we are confident that a split-off is the appropriate path forward to bring value to our shareholders.”