(CNN) — Huggies maker Kimberly-Clark announced Monday it will buy Tylenol’s parent company Kenvue in a nearly $50 billion deal, creating a massive consumer products conglomerate.
The acquisition comes a few weeks after President Donald Trump made unfounded claims linking autism to Tylenol use during pregnancy, sending Kenvue’s stock sharply lower. The company has staunchly pushed back against his administration’s accusations.
The companies said that the combined business will bring together 10 billion-dollar brands and will drive annual revenue of $32 billion. The new company will make products that “touch nearly half the global population through every stage of life,” including Johnson’s baby products, Clean & Clear skin care, Kleenex, Listerine mouthwash, and Depends adult diapers, the companies said in a statement.
The cash-and-stock deal has Kimberly-Clark (KMB) paying $21.01 for each Kenvue (KVUE) share, a hefty premium over the $14.37 of its Friday closing price. The stock soared nearly 20% in premarket trading. Kimberly-Clark’s stock fell nearly 16% in premarket trading.
Kenvue was spun off in 2022 from Johnson & Johnson, with J&J keeping its recognizable name for its larger pharmaceutical business unit and offloading its consumer brands. It was widely expected to be an acquisition target.
The transaction is scheduled to close in the second half of next year. Following the closing, Kimberly-Clark shareholders will own about 54% of the newly combined company, with Kenvue shareholders owning the rest.
The deal comes with some considerable risks.
On Monday, Kenvue reported an overall sales decline of 4.4%, as well as its its self care unit, which includes Tylenol, falling 5.3% for the quarter ending on September 28.
The company explained that the sales declines were the result of “trade inventory reductions in certain customers,” likely that from cash-strapped customers trading down to cheaper, private labels that offer similar quality — perhaps a warning a sign to the new company that’s betting on a lineup of name-brand companies.
And Kenvue faces potentially intense legal scrutiny over the Trump administration’s claims. Last week, Texas Attorney General Ken Paxton filed a lawsuit against Kenvue, claiming that the company “deceptively” marketed Tylenol to pregnant women and that the medication is tied to an increased risk of autism. Kenvue said it will “vigorously defend” against the claims.
Kimberly-Clark CEO Mike Hsu addressed the Tylenol issue on a call with analysts Monday, saying its “board carefully considered all the risks and all the opportunities” and had multiple meetings with “medical, regulatory and legal experts” and decided that the deal is a “generational value creation opportunity for both companies.”
“We stand firmly behind the science and the safety of our products,” added Kenvue CEO Kirk Perry. “These things have been studied for decades, and we continue to stand by that science as the medical community does as well.”