Kimberly-Clark is spending $40 billion to buy Kenvue in a blockbuster deal that has confused some investors as the Tylenol maker struggles with poor sales, lawsuits and a White House attack over the painkiller’s link to autism.
Kimberly-Clark shares plunged after Monday’s announcement as shareholders scrutinized the 46% premium being paid to the former Johnson & Johnson unit, which has had a tumultuous year.
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Kenvue fired its CEO in July and has come under fire from President Donald Trump over unproven claims that using Tylenol during pregnancy can cause autism in children.
Kenview stock, which had fallen sharply since Trump’s comments, rose 17.5% on Monday. Under pressure from activists, many investors had been waiting for months to sell all or part of the company.
Jay Woods, chief market strategist at Freedom Capital Markets, said the market reaction suggests some investors believe Kimberly-Clark “may be buying damaged goods.”
Despite the concerns, Kimberly-Clark expects the deal to save $2.1 billion annually, and the addition of Kenvue’s vast portfolio of brands, from Listerine mouthwash to skin care brands such as Aveeno and Neutrogena, is expected to generate about $32 billion in annual revenue for the combined company.
“Both companies are on shelves side by side, so their scale and distribution logic makes sense, even if Tylenol’s overhang remains a shadow that buyers want to avoid,” said Kimberly Forrest, chief investment officer at Boke Capital Partners.
tylenol headache
“Kimberly-Clark is taking on potential litigation risk against the Tylenol brand…which is difficult to quantify,” said Robert Moskow, an analyst at TD Cowen.
There are concerns about the company’s possible legal exposure to hundreds of private lawsuits alleging that Kenvue concealed a link between Tylenol and autism or attention-deficit hyperactivity disorder in children.
U.S. Secretary of Health and Human Services Robert F. Kennedy Jr. recently said there was no conclusive evidence of such a link, but said existing data were “very suggestive.”
BNP Paribas analyst Navan Tai said in a note last month that Tylenol sales in the U.S. fell 11% from Sept. 20 to Oct. 4 after President Trump’s comments.
Kenvue is also fighting a lawsuit related to its talc-based baby powder products.
“Most investors expected Kenvue to sell some brands rather than the entire company, given the Tylenol and talc overhang, but Kimberly-Clark likely saw long-term value in a strong brand portfolio trading at a deep discount,” said James Harlow, senior vice president at Novare Capital Management.
“Great” for Kenview
Kenvue investors welcomed the deal.
One long-term investor who spoke with the company’s board and management in recent months called the deal “excellent,” while others said the price wasn’t as good as they expected two months ago, before the company came under fire from the White House.
Kenview has long suffered from weakness in its core business, particularly in skin health and beauty, and has been subject to active investor activity. The company announced Monday that its skin health division’s third-quarter sales fell 3.2% to $1.04 billion.
“One of the challenges at Kenvue right now is that we live in the middle, in the middle of nowhere, with no place to live,” said Kirk Perry, who was named Kenvue’s CEO earlier in the day.
Sector struggles
Kimberly-Clark is also responding to a consumer goods environment where shoppers are increasingly demanding more value, forcing companies including industry leader Procter & Gamble to invest in smaller pack sizes and cut unprofitable business units.
The company will sell a majority stake in its international tissue business to Brazilian pulp maker Suzano as part of a restructuring, with the proceeds contributing to the acquisition of Kenview, the company announced on Monday.
Still, some analysts said this reflected a change in the trading environment. “This proves how easing interest rate expectations is driving large-scale transformational mergers,” said Boke Capital’s Forrest.
Aiming for over $40 billion
Kenvue shareholders will receive $3.50 per share, or 0.15 Kimberly-Clark shares for each Kenvue share they own. That would mean the stock would be worth $40.32 billion, according to Reuters calculations.
The transaction is expected to close in the second half of 2026 and will be funded through a combination of cash and debt, with active financing from JPMorgan Chase Bank.
If a deal falls through, either party could be required to pay a $1.12 billion cash termination fee, according to regulatory filings.
Upon completion of the acquisition, Kimberly-Clark CEO Mike Hsu will serve as chief executive and chairman of the combined company.
