J&J’s $40 Billion Kenvue Stock Swap:  What You Need to Know

Text size

Johnson & Johnson’s iconic baby powder became a liability risk because of talc lawsuits.

Justin Sullivan/Getty Images

If you are a

Johnson & Johnson

shareholder who covets its


subsidiary, J&J has a deal for you.

Johnson & Johnson (ticker: JNJ) plans to distribute to its shareholders about $40 billion of stock in Kenvue, its consumer products business with brands like Tylenol, Listerine and Bandaid. J&J is using a splitoff rather than a spinoff, and there are key features that retail investors need to understand before they decide to participate.

For those who want to own Kenvue, the deal is attractive because Johnson and Johnson is offering to make the swap at a 7% discount to Kenvue’s stock price. The actual exchange ratio will be based on the trading prices of J&J and Kenvue in a three-day pricing period from Aug. 14 to 16.

Here are some key things that investors need to know about the deal:

Johnson & Johnson investors have to opt in to the exchange offer to participate and they have until Aug. 18 to make a decision. J&J holders should be getting information from their brokerage firms about the offer.

J&J holders can swap all, some or none of their shares. If holders do nothing, they will keep all of their J&J stock. This differs from a spinoff in which holders of the parent company’s stock automatically get shares of the spinoff company. 

The transaction will be taxed favorably for J&J holders, according to tax expert Robert Willens. “There is little doubt that the distribution will be tax-free,” Willens told Barron’s in July. …..

Read More

Recommended For You

Leave a Reply

Your email address will not be published. Required fields are marked *