Ripping off the IPO Band-Aid 🩹

After a quiet start for Initial Public Offerings (IPOs) in 2023, the year could be about to catch up with a bang! 💥 Rumors are swirling on prospective monster IPOs from China’s fast-fashion app Shein, chip designer ARM, and maybe even Alibaba’s giant global online commerce business. But last week it was healthcare giant Johnson & Johnson (JNJ) that kicked things off with the listing of their Kenvue (KVUE) division.

Kenvue is the business behind bathroom basics like Band-Aid, Listerine, Neutrogena and Clean & Clear. 🧴 The kind of brands that can cover both winter flu season, and those desperate last minute Mother’s Day gifts from Chemist Warehouse!

Not only did the spin-off turn Kenvue into the world’s largest pure-play consumer health company (by revenue), the US$3.8 billion they raised more than doubled the years’ total IPO proceeds to date. For J&J however, the extra cash is likely to be a mere Band-Aid on the more than 40,000 lawsuits the company has been slapped with over claims that its talc-based powder products were contaminated with the carcinogen asbestos. 🩹Although Kenvue will inherit some of the brands, parent J&J has said it will take the fall for liabilities associated with lawsuits in USA and Canada. Still, Kenvue may not be totally in the clean and clear, saying it could be subject to legal claims from outside the USA and Canada.

Kenvue’s liberation is part of a trend of once big corporates splitting into parts. Industrial heavyweight General Electric (GE) recently split out their healthcare division into GE Healthcare (GEHC) and plans to spin off their energy and aviation units in 2024. In case that wasn’t enough to give you a headache, the Panadol in your cupboard now comes from a company called Haleon (HLN - ADR), the consumer healthcare division that popped out of pharma giant GSK (GSK – ADR) last year. Phew! 😅