- Kimberly-Clark plans to acquire Kenvue for over $40 billion, a landmark deal.
- Kenvue faces scrutiny, litigation and demand issues, impacting its stock and leadership.
- Kimberly-Clark expects $2.1 billion in savings from the acquisition by 2026's second half.
NEW YORK — Kleenex maker Kimberly-Clark said on Monday it will buy Kenvue for more than $40 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 $21.01 per share in cash and stock, implying a hefty 46.2% premium to the stock's last closing price. Shares of Kenvue were up about 20% in premarket trading, while Kimberly-Clark's shares were down nearly 15%.
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, a claim not backed by conclusive research.
Last week, U.S. Health and Human Services Secretary Robert F. Kennedy Jr acknowledged that there was no evidence proving Tylenol causes autism, but repeated his view that signs of a link between the two were "very suggestive."
Apart from certain looming litigations against Tylenol, Kenvue is also facing lawsuits over claims that its baby powder products caused cancer, dampening investor sentiment.
Still, Kimberly-Clark expects about $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 U.S. consumer goods sector to date, the merger will give Kimberly-Clark access to Kenvue's vast portfolio of brands from Listerine mouthwash and Band-Aid to skincare names like Aveeno and Neutrogena — with the combined company expected to bring in annual revenues of roughly $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," Modi said, adding that it will take investors some time to process the long-term implications.
We believe Kimberly-Clark's capabilities are evolved versus Kenvue — which should help improve brand performance.
–Nik Modi, RBC Capital Markets analyst
Sources in June told Reuters the strategic review of Kenvue's operations could include a sale or breakup of the company that had been 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 Monday.
Going for over $40 billion
Kenvue's shareholders will receive $3.50 per share and 0.15 Kimberly-Clark shares for each Kenvue share held. That implies an equity value of $40.32 billion, according to Reuters calculations.
Either party may be required to pay a $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 had received committed financing from JPMorgan Chase Bank, and that it expects to fund Kenvue's purchase through a mix of cash and debt.
Contributing: Savyata Mishra
