Kenvue is the new name in consumer healthcare. Flush with IPO cash will a canny M&A be its first priority?

Kenvue is a new name in consumer health, it’s the spin-off of J&J’s consumer healthcare business.

This week the company IPOed in New York raising $3.7b. The company sold 10% more shares than planned and as I write the stock is trading 16% above IPO price.

Kenvue you ask? What does it mean? It’s a concocted name, a combination of a Scottish word ‘Ken’ meaning knowledge and ‘vue’ French for vision. 

Kenvue has a blistering array of brands, including Tylenol, Band Aid, Listerine and Johnson’s baby shampoo to name a few. 

Photo source: Possessed Photography

What’s driving the spin off? Officially J&J sees faster growth in pharma and medical devices compared to consumer health. 

Lurking in the background far away from the press releases is J&J’s huge product liability settlement for its baby talc powder. In April J&J agreed a $8.9b payout. Although J&J said it planned to stop selling the baby talc, the lawsuit is still a major distraction for management. Inevitably the publicity tarnished the J&J brand too. 

J&J was hoping to shield Kenvue from the J&J talc lawsuits, though reading the financial press it’s not clear this has been the case.

I suspect talc lawsuits are also factors behind the Kenvue spin off and rebrand.

Kenvue is not the only pharma to spin off and rebrand its consumer health business. In the last two years GSK conceived Haleon, and Takeda, Alinamin Pharmaceuticals. There’s lots of activity in consumer healthcare globally, Governments are promoting prevention, competition is hotting up as heavy hitters like P&G and private labels flex their muscles.  

Although 50% of Kenvue’s revenues come from outside North America, management will push international further. Cough, cold and eye care are core therapies for Kenvue, and there will be geographical gaps to plug with the existing portfolio. Tylenol is largely a North American brand for example. 

Given the time and investment required to grow CHC brands organically I’m sure Kenvue’s M&A radar will be on high alert. Mundipharma is said to be divesting its Betadine business for example; one of Betadine’s uses is for sore throats. 

Canny is another Scottish word one only hears rarely these days. It means showing shrewdness or good judgement. What will Kenvue’s canny first bet be?

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