By Juveria Tabassum and Sriparna Roy
(Reuters) -Kleenex maker Kimberly-Clark said on Monday it will buy Tylenol parent Kenvue for more than $40 billion to create one of the biggest consumer health goods companies in the United States.
Shares of Kenvue were up 18% in premarket trading, while Kimberly-Clark's shares were down 12.5%. Kenvue's shareholders will get $21.01 per share in cash and stock, which implies a premium of 46.2% to the stock's last closing price.
This is set to be the largest buyout
in the U.S. consumer goods sector to date.
Kimberly Clark would be scooping up the former Johnson & Johnson unit after months of struggles by Kenvue that include the ouster of its CEO in July and being targeted by President Donald Trump, who has asserted that Tylenol causes autism, a claim not backed by science.
Shares slumped after Trump's claim in September. Last week, U.S. Health and Human Services Secretary Robert F. Kennedy Jr said there was not enough evidence for the claim.
Apart from the specter of looming Tylenol litigations, Kenvue is also facing lawsuits over claims that its baby powder products caused cancer, dampening investor sentiment.
Still, Kimberly-Clark said it expects about $2.1 billion in annual cost savings from the acquisition, which it expects to close in the second half of 2026.
The merger will bring together brands including Neutrogena, Huggies and Kleenex under a consumer health and personal care company with expected combined annual revenues of roughly $32 billion.
The timing of the deal, although probable, was earlier than expected, given the negative litigation and regulatory headlines around Kenvue, RBC Capital Markets analyst Nik Modi said.
"We believe Kimberly-Clark's capabilities are evolved versus Kenvue — which should help improve brand performance," Modi said, adding that it will take investors some time to process the long-term implications.
Sources in June told Reuters the strategic review of Kenvue's operations could include a sale or breakup of the company that had been spun off from healthcare conglomerate Johnson & Johnson in 2023.
Kenvue's shareholders will receive $3.50 per share and 0.15 Kimberly-Clark shares for each Kenvue share held. That implies a an equity value of $40.32 billion, according to Reuters calculations.
Either party may be required to pay a $1.12 billion termination fee in cash if the deal falls through, according to a regulatory filing.
Upon closing, Kimberly-Clark's CEO Mike Hsu will take over as the top boss and chairman of the combined company. Kimberly-Clark said it had received committed financing from JPMorgan Chase Bank, and that it expects to fund Kenvue's purchase through a mix of cash and debt.
(Reporting by Juveria Tabassum and Sriparna Roy in Bengaluru; Additional reporting by Savyata Mishra; Editing by Arun Koyyur and Devika Syamnath)
