Multinational Kimberly-Clark, with a strong presence in over 175 countries including Argentina, has put $40 billion on the table to acquire a consumer goods company in the USA, which is also entangled in legal disputes with one of its star brands. This news is sensational in itself, and even more so when the expenditure comes from Kimberly-Clark.
Most analysts expected Kenvue to sell off some selected brands, not the entire company, considering the conflicts with Tylenol and talc. However, Kimberly-Clark likely saw long-term value in a solid portfolio of brands that was trading at a significant discount, explained James Harlow, senior vice president of Novare Capital Management. But there is an irrefutable logic behind the total transfer: both companies share shelf space in the hygiene, health, and personal wellness segment, making the logic of economies of scale and distribution clear.
The market's reaction to the announcement balances the risks associated with Tylenol lawsuits: Kimberly-Clark's shares fell sharply, while Kenvue's shares simultaneously rose by 17.5%. Born in 2023 from the spinoff of Johnson & Johnson, Kenvue is paying a 46% premium for the former division of that firm. It has had a turbulent year: in July, it removed its CEO and was criticized by the U.S. government for unproven claims that Tylenol use during pregnancy could cause autism in children, according to Reuters reports.
In any case, investors' concerns about the merger may be partly due to Kenvue's potential legal exposure to hundreds of private lawsuits and litigation related to its baby talc products.
The second half of 2026
According to international agency reports, the transaction is expected to be completed within a year due to the number and complexity of its aspects. Kenvue shareholders will receive $3.50 in cash per share and 0.14625 shares of Kimberly-Clark for each share they own, implying a total consideration of $21.01 per share, based on the closing price of October 31.
"We are pleased to have reached this agreement with Kimberly-Clark, which offers immediate value to our shareholders and substantial growth potential in the combined new company," stated Larry Merlo, Chairman of the Board of Kenvue. "We are excited to bring two iconic companies together to create a global leader in health and wellness," affirmed Mike Hsu, President and CEO of Kimberly-Clark, when announcing the transaction.
Current Kimberly-Clark shareholders will control 54% of the new company and Kenvue shareholders the remaining 46%.
Extensive health and wellness portfolios
This is the largest acquisition in the history of the North American consumer goods sector, which will give Kimberly-Clark control over Kenvue's extensive brand portfolio—including Listerine, Band-Aid, Aveeno, and Neutrogena—and generate combined annual revenues of approximately $32 billion.
Kimberly-Clark itself, like the vast majority of companies that have had to adapt to global changes in consumption, is operating in a challenging environment, although it has high-penetration brands like Kleenex, Huggies, and Scott. Bokeh Capital Partners' Director of Investments, Kimberly Forrest, contextualized the deal: "This demonstrates how expectations of lower interest rates are driving large and transformative mergers."
Customers everywhere are adjusting their finances and have become more price-sensitive, forcing companies to offer smaller packaging and divest unprofitable business units. Kimberly-Clark has already restructured and sold a majority stake in its international tissue paper business to Brazil's Suzano, and the funds from this sale will be used to finance the acquisition of Kenvue.
