Kimberly-Clark just dropped a jaw-tightening $40 billion to scoop up Kenvue, the ex-Johnson & Johnson consumer health spin-off, and Wall Street isn’t sure whether to applaud or wince.
Shares of Kimberly-Clark tanked after Monday’s announcement, as investors tried to make sense of the 46% premium for a company fighting off lawsuits, CEO churn, and a political storm over Tylenol’s alleged link to autism, a claim blasted as unproven by scientists but amplified by President Trump.
Meanwhile, Kenvue’s stock, which had been sliding for months, soared 17.5%, with some investors calling the deal “awesome.” Others, less charmed, wondered why Kimberly-Clark wanted “damaged goods.”
“Both companies sit side by side on store shelves, so the scale and distribution logic make sense even if the Tylenol overhang remains a shadow any buyer would rather avoid,” said Kimberly Forrest, CIO at Bokeh Capital Partners.
The hygiene giant says it can squeeze $2.1 billion in annual cost savings, adding Kenvue’s lineup, from Listerine to Aveeno and Neutrogena, to create a $32 billion-revenue powerhouse. But the fine print isn’t all rosy.
“Kimberly-Clark will take on potential litigation risk for the Tylenol brand… This is hard to quantify,” warned TD Cowen’s Robert Moskow, citing hundreds of lawsuits alleging the company hid links between Tylenol and autism or ADHD.
The science remains shaky. US Health Secretary Robert F. Kennedy Jr recently said the data is “very suggestive,” but “no conclusive evidence” exists. Still, Tylenol sales plunged 11% after Trump’s remarks, according to BNP Paribas.
Kenvue is also still battling its talc powder litigation hangover, another legal headache Kimberly-Clark must now absorb.
On Kenvue’s side, there’s cautious optimism.
“One of our challenges at Kenvue right now is we’re living in between, which is no place to live – in the murky middle,” said new CEO Kirk Perry, acknowledging the company’s 3.2% slide in skin-care sales last quarter.
Kimberly-Clark, meanwhile, is reshaping itself for a thriftier consumer market, even offloading part of its tissue business to Brazil’s Suzano to help fund the deal.
Kenvue shareholders will get $3.50 in cash plus 0.15 Kimberly-Clark shares for each share held, roughly a $40.3bn valuation. The buyout, funded through cash and debt backed by JPMorgan, is set to close in late 2026.
If it unravels, either side owes a $1.12bn breakup fee.
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