J&J says it will retain 9.5% stake in Kenvue carve-out after exchange offer

Investing.com -- Shares in Johnson&Johnson (NYSE:JNJ) slipped on Monday after the American healthcare giant said it will retain about a 9.5% stake in its consumer health carve-out Kenvue (NYSE:KVUE) following a share exchange offer.

In a statement on Monday, the company also announced that the swap, which allowed J&J shareholders to exchange their holdings for those of Kenvue at a 7% discount, was oversubscribed. As a result, participating J&J stockholders will only see 23.8% of their shares converted into Kenvue shares, J&J said.

The exchange offer, which expired late last week, was popular among stakeholders, with 803 million shares -- or about 30% of J&J's outstanding stock -- tendered. Owners of fewer than 100 J&J shares who submitted them all for exchange will not be impacted by the proration, J&J noted, in a boon for many retail investors who were attracted by the conditions of the swap.

When the exchange offer was launched in July, J&J owned about 90% of Kenvue's outstanding shares. The New Jersey-based group said at the time that it wanted to split off at least 80.1% of the stock, which was seen as an attempt to re-focus its business on medical devices and pharmaceuticals.

Kenvue, once the consumer arm of J&J, was separated earlier this year. Shares in the producer of popular brands like Listerine mouthwash and Tylenol painkillers raised $3.8 billion in the biggest initial public offering since 2021.