Kimberly-Clark agrees to buy Kenvue, maker of Tylenol, for $40 billion
- The San Juan Daily Star
- 11 hours ago
- 4 min read
By LAUREN HIRSCH and REBECCA ROBBINS
Kimberly-Clark, the consumer products giant that owns Kleenex and Huggies, said earlier this week that it agreed to spend about $40 billion to acquire Kenvue, the embattled maker of Tylenol, which has fought unproven claims by the Trump administration that link the common pain reliever to autism.
Shares of Kenvue have plummeted this year as U.S. health officials have claimed that acetaminophen — the active ingredient in Tylenol — was linked to autism. In September, President Donald Trump said that pregnant women should “fight like hell not to take it.”
Kenvue’s stock rebounded strongly after the deal announcement, rising 12% at the close of trading Monday. Kimberly-Clark’s share price fell nearly 15% to its lowest level since 2018.
Kenvue was spun off by Johnson & Johnson in 2023 to run the group’s consumer products division. Johnson & Johnson kept the more profitable, faster-growing businesses in pharmaceuticals and medical devices.
Kenvue has struggled to find its footing as a stand-alone company, and activist investment firm Starboard bought a stake in the company and pushed for change. In March, the CEO of Starboard, Jeffrey Smith, took a seat on Kenvue’s board of directors. In July, Kenvue announced the departure of its CEO alongside a review of the company’s strategy.
On Monday, Kenvue said it expected sales to fall by the “low single digits” this year. Last quarter, its “self-care” unit, which includes Tylenol, recorded the biggest drop in sales of all its divisions.
Talks with Kimberly-Clark and other prospective suitors began after July’s announcement of a strategic review, according to three people familiar with the negotiations, who were not authorized to speak publicly about private deliberations. Kimberly-Clark had long been interested in Kenvue’s business, given the prestige of brands like Band-Aid, the overlap in target customers and the potential to streamline costs, two of the people said.
Acquisition talks were already underway when the Trump administration in September began linking Tylenol to autism, the people said. The resulting turmoil, which was reflected in Kenvue’s share price, helped Kimberly-Clark push for a deal that valued Kenvue at a discount to its peers. The deal was also a bet that the market had overreacted to the risk of more scrutiny from Washington, one of the people said.
Under the terms of the cash-and-stock deal with Kenvue, Kimberly-Clark shareholders would own roughly 54% of the new company. The combined group would generate about $32 billion in annual revenue and $7 billion in operating profit, the companies said. There are nearly $2 billion in “synergies” that could be achieved by cutting costs, which often means layoffs, in the three years after the companies combine, they added.
Kenvue makes many household name brands, such as Band-Aid, Listerine, Neutrogena and Johnson’s Baby Shampoo. But since the Trump administration took up the unproven Tylenol-autism link, that product has unexpectedly become the company’s face.
The president’s interest in the issue could also give new life to hundreds of lawsuits in state and federal courts that have been filed in recent years by families claiming that their children were diagnosed with autism or attention-deficit/hyperactivity disorder after taking Tylenol during pregnancy.
And last week, Texas Attorney General Ken Paxton sued Kenvue and Johnson & Johnson, claiming that the companies hid evidence linking Tylenol to neurodevelopmental disorders. The suit also claimed, without providing evidence, that Kenvue was created to shield Johnson & Johnson from liability over Tylenol. The plan to spin off Kenvue was announced in 2021, while the Tylenol lawsuits picked up steam in 2022.
Scientists have long studied a potential connection between acetaminophen and neurodevelopmental disorders like autism, but research has so far produced mixed results.
Kenvue does not report its revenue from Tylenol, but the product generates roughly $1 billion in annual sales for the company, according to an estimate from Morningstar, the financial services firm. Competitors make other widely used generic acetaminophen products.
Kenvue also sells baby powder products that have been the source of extensive legal trouble for Johnson & Johnson, which created a special subsidiary in 2021 to try to bear the brunt of lawsuits it faced.
For many years, Johnson & Johnson has tried to settle tens of thousands of claims that talcum previously used in its baby powder caused cancer. The allegations were that Johnson & Johnson knew its talc products contained carcinogenic fibers, including asbestos, but hid the risks in pursuit of profits. In March, a federal bankruptcy judge rejected Johnson & Johnson’s latest multibillion-dollar settlement offer. In recent years, the talc-based baby powder products were discontinued and replaced by a cornstarch version.
Plaintiffs in talc cases have named Kenvue in U.S. lawsuits, but under the terms of the spinoff, Johnson & Johnson agreed to keep those liabilities and indemnify Kenvue in the United States and Canada. Last month, in a new legal threat, a group of plaintiffs in Britain, where Kenvue is not shielded, sued Johnson & Johnson and Kenvue over the issue.
In response to questions from analysts Monday about pending litigation related to both talc and Tylenol, Kenvue CEO Kirk Perry said the company stood “firmly behind the science and the safety of our products.”
Mike Hsu, Kimberly-Clark’s CEO, told analysts that to vet the acquisition amid the litigation, the company’s board had “multiple sessions” with “the world’s foremost scientific, medical, regulatory and legal experts.”
“Going through that process multiple times, I think the work affirmed that this is a generational value creation opportunity for both companies,” Hsu said.
The deal between Kimberly-Clark and Kenvue is expected to close in the second half of 2026, subject to approvals from shareholders and regulators. If one of the companies is responsible for the deal falling apart, it must pay a breakup fee of roughly $1 billion to the other party, according a regulatory filing.
Hsu would become chair and CEO of the new company. The combined group would be based in Kimberly-Clark’s headquarters in Irving, Texas, and “continue to have a significant presence in Kenvue’s locations.” Kenvue moved to a new headquarters campus in Summit, New Jersey, earlier this year.