Kimberly-Clark is plunking down $40 billion to buy Kenview in a massive deal that has some investors confused, as the maker of Tylenol faces weak sales, lawsuits and White House attacks Linking his pain to autism.
Kimberly-Clark shares fell sharply after Monday’s announcement as stockholders scrutinized the 46 percent premium paid for the former Johnson & Johnson unit, which has had a turbulent year.
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Kenview fired its CEO in July and drew criticism from United States President Donald Trump over unproven claims that Tylenol use during pregnancy could cause autism in children.
Kenview shares, which have fallen sharply since Trump’s comments, rose 17.5 percent on Monday. Many investors have been waiting for the sale of all parts of the company for months, succumbing to pressure from activists.
Jay Woods, chief market strategist at Freedom Capital Markets, said the market reaction suggested some investors believed Kimberly-Clark “may be buying damaged goods”.
Despite the concerns, Kimberly-Clark estimates annual cost savings of $2.1bn from the deal, with Kenview’s vast portfolio of brands ranging from Listerine mouthwash to skincare names such as Aveeno and Neutrogena expected to generate roughly $32bn in annual revenue for the combined company.
“The two companies sit side-by-side on store shelves, so the scale and distribution logic makes sense, even if the Tylenol overhang remains a shadow any buyer would avoid,” said Kimberly Forrest, chief investment officer at Bokeh Capital Partners.
Tylenol headache
“Kimberly-Clark will take a potential lawsuit risk for the Tylenol brand … it’s hard to quantify,” said TD Cowen analyst Robert Moscow.
There are concerns about Kenview’s potential legal exposure in hundreds of private lawsuits alleging the company concealed alleged links between Tylenol and autism or attention deficit hyperactivity disorder in children.
While US Secretary of Health and Human Services Robert F. Kennedy Jr Recently stated that there is no conclusive evidence of such a link, calling the existing data “highly suggestive”.
US sales of Tylenol fell 11 percent between Sept. 20 and Oct. 4 after Trump’s remarks, BNP Paribas analyst Nawan Ty said in a note last month.
Kenvue is facing a lawsuit related to its talc-based baby powder products.
“Most investors expected Kenvue to sell select brands because of the Tylenol and talc overhangs, not the entire company. But Kimberly-Clark saw long-term value in a strong brand portfolio trading at a deep discount,” said James Harlow, senior vice president of Novare Capital Management.
‘Awesome’ for Kenvue
Kenvue investors enjoyed the deal.
One longtime investor who has spoken with the board and management over the past few months called the deal “fantastic,” while others said the price was not as good as they had hoped two months before the company came under fire from the White House.
Kenview has long struggled with weakness in its core businesses, particularly in the skin health and beauty segment, and has previously had investor activism. The company said Monday that third-quarter sales in its skin health division fell 3.2 percent to $1.04 billion.
“One of our challenges right now at Kenview is that we’re living in that in-between, with no place to live — the blurry middle,” said Kirk Perry, who was named Kenview’s CEO earlier in the day.
Sector conflicts
Kimberly-Clark is navigating a consumer goods environment saturated by buyers looking for more value – forcing companies including sector bellwether Procter & Gamble to invest in smaller pack sizes and trim underperforming business units.
As part of a restructuring, it sold a majority stake in its international tissue business to Brazilian pulp maker Suzano, with the proceeds helping to buy Kenview, the company said on Monday.
Still, some analysts said it reflected a changing deal environment. “This is how lower rate expectations are fueling large, transformative mergers,” said Bokeh Capital’s Forrest.
Going up to $40bn
Kenvue shareholders will receive $3.50 per share and 0.15 Kimberly-Clark shares for each Kenvue share. According to calculations by Reuters news agency, this implies an equity value of $40.32bn.
The deal, which is expected to close in late 2026, will be financed through a mix of cash and debt, with committed funds from JPMorgan Chase Bank.
According to regulatory filings, either party will have to pay a $1.12bn termination fee in cash if the deal is completed.
Upon closing, Kimberly-Clark CEO Mike Hsu will take over as the combined company’s top boss and president.