American pharmaceutical company Johnson & Johnson (J&J) has unveiled its plan to split off at least 80.1% of the shares of consumer health company Kenvue by using an exchange offer.
The initial public offering (IPO) of Kenvue, previously Johnson & Johnson’s consumer health business, was concluded last month.
According to the conditions of the exchange offer, Johnson & Johnson’s shareholders can trade all, some, or none of their shares of the company’s common stock for shares of Kenvue common stock.
The offering is expected to help Johnson & Johnson to advance its plan to spin off the consumer health unit and focus on its larger pharmaceuticals and medical devices businesses, reported Reuters.
The exchange offer is anticipated to be tax-free for US Federal income taxes purposes.
Currently, Johnson & Johnson has 89.6% of the total outstanding shares of Kenvue common stock.
The pharmaceutical company said that it has received a waiver of the 180-day lock up regarding the shares of Kenvue common stock it owns from the joint lead book-running managers of the IPO in conjunction with the anticipated split-off.
Johnson & Johnson chairman and CEO Joaquin Duato said: “The separation of Kenvue further sharpens Johnson & Johnson’s focus on transformational innovation specifically in Pharmaceutical and MedTech.
“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.”
The exchange offer will allow Johnson & Johnson shareholders to exchange some, all, or none of their common stock shares for shares of Kenvue common stock at a 7% discount.
The deal is subject to an upper limit of 8.0549 shares of Kenvue common stock per share of Johnson & Johnson common stock.
Tendering shareholders should expect to receive roughly $107.53 worth of Kenvue common stock for every $100 worth of Johnson & Johnson common stock they tender, assuming the upper limit is not in effect.
