Johnson & Johnson is spinning off its consumer division, which could come with risks (2024)

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Johnson & Johnson is spinning off its consumer division, which could come with risks? ›

Johnson & Johnson is spinning off its consumer division, which could come with risks. Johnson & Johnson announced in November that it plans to spin off its consumer business into a new publicly traded company by November 2023. The news didn't surprise Wall Street.

The exchange offer will permit Johnson & Johnson shareholders to exchange some, all or none of their shares of Johnson & Johnson common stock for shares of Kenvue common stock at a 7% discount, subject to an upper limit of 8.0549 shares of Kenvue common stock per share of Johnson & Johnson common stock tendered and ...

What happens to JNJ stock when the company splits? Once Johnson and Johnson splits, JNJ stock will only give traders and investors exposure to the medical device and pharmaceutical proceeds of the company. The new company, which will be listed as Kenvue, will trade separately.

Facing 50,000-plus lawsuits linking Baby Powder to cancer, Johnson & Johnson mulls a third bankruptcy filing. Johnson & Johnson has talc cases set for trial everywhere from Pennsylvania to California between November and December 2024.

Why is Johnson and Johnson going to split? Johnson and Johnson's split is aimed at refocusing the business and streamlining its operations. By removing the consumer arm, Johnson and Johnson will put more into developing medicines and medical devices, which brought in around $80 billion for the firm combined.

Overall, the performance of JNJ stock with respect to the index has been quite volatile. Returns for the stock were 9% in 2021, 3% in 2022, and -11% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 - indicating that JNJ underperformed the S&P in 2021 and 2023.

For each share of Johnson & Johnson common stock that is validly tendered and not validly withdrawn by shareholders and that is accepted by Johnson & Johnson pursuant to the exchange offer, Johnson & Johnson will deliver 8.0324 shares of Kenvue common stock to or at the direction of any such tendering shareholder.

A company's stock price after completing a spinoff depends on whether any of the spun-off entity was retained. In a complete spinoff, the stock price of the company right before the spinoff should theoretically be equal to the sum of its post-spinoff stock price plus the initial stock price of the spun-off company.

Impact on Investors

The sum of the two stock prices typically approximates the parent company's pre-spinoff stock price. Spinoffs shares can lose value for a period of time after the new company is created for other reasons, as well. The drop can be due to parent company shareholders selling their spinoff shares.

Overall, the performance of JNJ stock with respect to the index has been quite volatile. Returns for the stock were 9% in 2021, 3% in 2022, and -11% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 — indicating that JNJ underperformed the S&P in 2021 and 2023.

How much will the talcum powder lawsuit settle for in 2024? ›

2024 Talcum Powder Lawsuit Update

Previously in January 2024, J&J announced it would pay $700 million to settle talc consumer protection claims in 42 states.

Shares of Johnson & Johnson (JNJ 0.05%) were sliding today as the diversified healthcare company edged past estimates in its fourth-quarter earnings report, but agreed to pay $700 million to settle lawsuits saying that its talc-based baby powder caused cancer.

After failing to resolve a mountain of talcum-powder lawsuits through two unsuccessful bankruptcy attempts, Johnson & Johnson has agreed to a $700 million settlement that would free the company from some consumer protection claims—and a small part of the talc litigation that it faces.

Employer J&J Sued for Breach of Fiduciary Duties and Mismanagement of Its Group Health Plan. A class action lawsuit was just filed against drug manufacturer Johnson & Johnson (J&J) in its capacity as an employer and plan sponsor.

What is a Spin-Off? A Spin-Off refers to when a parent company sells a specific business unit or division, i.e. a subsidiary, to effectively create a new standalone company. As part of the spin-off, the parent company's existing shareholders are given shares in the new independent company.

NEW BRUNSWICK, N.J. September 28, 2022 — Johnson & Johnson (the “Company”) (NYSE: JNJ) today took another step forward in establishing two independent, market-leading companies with the announcement of Kenvue as the name for the planned New Consumer Health Company.

Johnson & Johnson (ticker: JNJ) said late Wednesday that the exchange ratio has been set at roughly 8.03 shares of Kenvue (KVUE) for each of its own shares.

Kenvue Stock Forecast

The 13 analysts with 12-month price forecasts for Kenvue stock have an average target of 24.69, with a low estimate of 18 and a high estimate of 30. The average target predicts an increase of 28.13% from the current stock price of 19.27.

The company now expects sales of $88 billion to $88.4 billion. That compares with a previous forecast of $87.8 billion to $88.6 billion. J&J expects adjusted earnings of $10.57 to $10.72 per share.

Dividend Data

Johnson & Johnson's ( JNJ ) dividend yield is 3.13%, which means that for every $100 invested in the company's stock, investors would receive $3.13 in dividends per year. Johnson & Johnson's payout ratio is 33.48% which means that 33.48% of the company's earnings are paid out as dividends.