Kimberly-Clark to Buy Tylenol Maker Kenvue for $40 Billion

Kimberly-Clark Corp. shares fell the most in a quarter century after agreeing to buy Kenvue Inc., whose biggest product, Tylenol, is in the crosshairs of the White House.

Kimberly-Clark said it would buy Kenvue for roughly $40 billion, snapping up the embattled company’s storied brands in a gamble that would vault the Kleenex owner into consumer health’s top tier. Kimberly-Clark agreed to pay a total consideration of $21.01 per share, a 46% premium to Kenvue’s closing price on Friday.

The deal values Kenvue at $48.7 billion on an enterprise basis, the companies said.

The transaction exposes Kimberly-Clark to legal and political peril. Kenvue has struggled financially since being spun off from Johnson & Johnson in 2023, and the company is fighting a mounting battle with the Trump administration over the safety of its biggest product, Tylenol. Kenvue shares had fallen nearly 33% this year.

Kimberly-Clark said the combination would create a company with $32 billion in revenue and allow it to surpass Unilever Plc to become the second-biggest seller of health and wellness products after Procter & Gamble Co.

Executives project combining the companies will unlock $1.4 billion incremental revenue within four years of closing. Kimberly-Clark can leverage Kenvue’s distribution network in India, for example, Kimberly-Clark Chief Executive Officer Mike Hsu said on a call with analysts.

The combined company’s scale, with products covering baby care, women’s health and aging, will make it “a leading global health and wellness player with the wherewithal to compete, drive significant investment and win,” Hsu said on the call. “We’ll serve a broader range of consumers through every stage of life.”

Kimberly-Clark’s shares tumbled as much as 14% in New York, its steepest intraday drop since 2000. Kenvue, meanwhile, surged by 20% at the open to $17.18, below the offer price.

Bloomberg's Diana Gomes reports.

Kimberly-Clark intends to fund the the transaction with cash on hand and proceeds from new debt issuance as well as the $3.4 billion sale of its international tissue business. JPMorgan Chase is providing a $7.7 billion bridge loan to facilitate the deal, according to a filing.

Kimberly-Clark “investors will be wary of the deal given the mounting legal risks facing Tylenol,” Vital Knowledge’s Adam Crisafulli said in a note.

He added that there will be concern about whether the Kleenex maker is “getting itself into a Bayer-Monsanto situation,” referring to Bayer AG’s acquisition of Monsanto in 2018, which ladened the German pharmaceutical company with legal costs.

Hsu said on a call Monday that Kimberly-Clark’s board carefully considered lawsuit risks relating to the deal.

Activists had swarmed Kenvue in recent months after a string of disappointing financial results. Besides Starboard Value LP’s Jeff Smith having a board seat after threatening a proxy fight, TOMS Capital Investment Management LP, DE Shaw & Co. and Third Point LLC had also taken stakes in Kenvue and were pushing for a sale, people familiar with the matter said.

All the representatives for the firms didn’t immediately respond to requests for comment on the positions, which were first reported by the Wall Street Journal.

Kenvue also removed its former CEO Thibaut Mongon in July.

President Donald Trump said in September that pregnant women shouldn’t take Tylenol, claiming it potentially causes autism. The state of Texas last week sued Kenvue and Johnson & Johnson, alleging that the companies hid the risks of autism and other disorders for children if mothers take Tylenol during pregnancy.

Kenvue argues the “overwhelming weight of the evidence” contradicts any claim that the nonprescription medicine is a risk for neurodevelopmental disorders. Untreated fevers and pain are knowns risks during pregnancy.

In the third quarter, Kenvue’s struggles continued. The company reported in a separate release on Monday that organic sales shrank 4.4%, worse than expected. The firm’s self care business unit — which contains Tylenol — led declines.

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