Kimberly-Clark is acquiring Tylenol manufacturer Kenvue through a transaction involving cash and stock, valued at approximately $48.7 billion, which will establish a significant enterprise in the consumer health products sector.
TL;DR
- Kenvue is acquiring Tylenol manufacturer Kimberly-Clark in a $48.7 billion cash and stock deal.
- The combined company will merge brands like Listerine, Band-Aid, Huggies, and Kleenex.
- Shareholders of Kimberly-Clark will own 54% of the new enterprise, generating $32 billion annually.
- The deal requires shareholder approval and is expected to close in the latter half of next year.
Shareholders of Kimberly-Clark will own about 54% of the combined company. Kenvue shareholders will own about 46% in what is one of the largest corporate takeovers this year. The deal must still be approved by the shareholders of both companies.
The combined company will have a huge stable of household brands under one roof, putting Kenvue’s Listerine mouthwash and Band-Aid side-by-side with Kimberly-Clark’s Cottonelle toilet paper, Huggies and Kleenex tissues. It will also generate about $32 billion in annual revenue.
Kenvue has spent a relatively brief period as an independent company, having been spun off by Johnson & Johnson two years ago. J&J first announced in late 2021 that it was splitting its slow-growth consumer health division from the pharmaceutical and medical device divisions.
Kenvue has since been targeted by activist investors unhappy about the trajectory of the company and Wall Street appeared to anticipate some heavy lifting ahead for Kimberly-Clark.
Kenvue’s stock jumped 12% Monday afternoon, while shares of Kimberly-Clark, based outside of Dallas, slumped by nearly 15%.
Kenvue's stock has dropped almost 50% from its peak near $28 in spring 2023. Morningstar analyst Keonhee Kim suggested that Kenvue's turbulent time as a public entity might stem partly from weak execution and insufficient experience running as an independent firm.
He suggested that the management of a more mature consumer goods firm, such as Kimberly-Clark, might assist in realizing some of Kenvue’s potential worth.
He additionally pointed out that Kenvue's portfolio features brands such as Neutrogena, Benadryl, and other established names found in consumer health sections for many years. Kim expressed his belief that Kimberly-Clark might have benefited from incorporating those items.
“I think that may have made the deal a lot more attractive … especially after the past couple of months of Kenvue’s stock price decline,” he said.
Kenvue and Tylenol have been thrust into the national spotlight this year as President Donald Trump and Health Secretary Robert F. Kennedy Jr. Promoted unproven and in some cases discredited ties between Tylenol, vaccines and the complex brain disorder autism.
Trump then urged pregnant women against using the medicine. That went beyond Food and Drug Administration advice that doctors “should consider minimizing” the painkiller acetaminophen’s use in pregnancy — amid inconclusive evidence about whether too much could be linked to autism.
Kennedy reaffirmed the FDA's guidance at a press conference last week. He stated that there's not enough proof to connect the medication with autism.
“We have asked physicians to minimize the use to when it’s absolutely necessary,” he said.
Kenvue has persisted in contesting the Trump administration's public remarks concerning Tylenol and acetaminophen, the primary component within it.
“We strongly disagree with allegations that it does and are deeply concerned about the health risks and confusion this poses for expecting mothers and parents,” Kenvue said in a statement on its website.
Other obstacles might arise for the merger. Filippo Falorni, an analyst at Citi Investment Research, expressed concern regarding the transaction's magnitude, considering recent sector trends and specifically the difficulties encountered by Kenvue.
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 unhappy about growth. Critics say Kenvue has relied too much on its legacy brands and failed to innovate.
Industry experts also highlight the weak history of mergers for consumer packaged goods firms. In September, Kraft Heinz announced its intention to break up its decade-old merger. The company's net revenue has declined annually since 2020.
Cheaper store brands are intensifying competition for Kimberly-Clark and Kenvue, similar to Kraft Heinz. Circana, a market research firm, reported that in 2024, store brands accounted for 51% of toilet paper and other household paper goods sold in the U.S. Additionally, store brands captured a 24% share of the health product market, which encompasses medications and vitamins.
A 100-count bottle of extra-strength Tylenol caplets was priced at $10.97 on Walmart's site this past Monday. Meanwhile, a 100-count bottle of extra-strength acetaminophen caplets under Walmart's Equate label was available for $1.98.
According to Circana, inflation influenced some of this consumer activity. Consumers are also redirecting their spending towards retailers featuring more store-brand products, such as Aldi and Costco. Furthermore, retailers are enhancing their selections and expanding them; in the past year, Walmart and Target both introduced new private labels to supplement their current lines.
According to Circana, both Kimberly-Clark and Kenvue produce well-known brands in categories where shoppers tend to stick with familiar names rather than store brands. These categories include hair care, skin care, feminine products, and oral hygiene. For instance, Kenvue is the owner of brands such as Aveeno and Neutrogena, and Kimberly-Clark is known for Kotex and Depend.
Mike Hsu, Kimberly-Clark's Chairman and CEO, will serve as chairman and CEO of the merged entity. Upon closing, three individuals from Kenvue's board will be integrated into Kimberly-Clark's board. The consolidated company will maintain its headquarters in Irving, Texas, while also establishing substantial operations near Kenvue's existing facilities and sites.
The transaction is anticipated to finalize in the latter half of the upcoming year. It requires further endorsement from the shareholders of each entity.
Kenvue shareholders are set to get $3.50 in cash and 0.14625 Kimberly-Clark shares for Every Kenvue share they own when the deal closes. This totals $21.01 per share, calculated using Kimberly-Clark's closing share price from Friday.
Kimberly-Clark and Kenvue announced they've identified approximately $1.9 billion in anticipated cost reductions within the initial three years following the deal's completion.
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AP Health Writer Tom Murphy contributed to this report.