Ask Onix
Kimberly-Clark announces $40bn acquisition of Kenvue amid market pressures
Kimberly-Clark, the manufacturer of household staples like Kleenex and Huggies, has agreed to acquire Kenvue-the maker of Tylenol, Band-Aid, and Neutrogena-in a cash-and-stock deal valued at over $40 billion (£30.5bn), the companies announced Tuesday. The merger would unite two consumer giants grappling with declining demand as budget-conscious shoppers shift to cheaper store-brand alternatives.
Struggling brands seek growth through consolidation
Both companies have faced headwinds in recent years. Kenvue, spun off from Johnson & Johnson in 2023 to sharpen focus on its consumer health division, has seen its shares plummet nearly 30% over the past year. Activist investors, capitalizing on the slump, had pushed for strategic changes, including a potential sale. Meanwhile, Kimberly-Clark's stock fell more than 10% in early trading following the announcement, signaling investor skepticism about the deal's risks.
Kenvue's challenges intensified last month after the Trump administration publicly linked Tylenol use during pregnancy to autism-a claim scientists call inconclusive. The controversy contributed to a 4% drop in Kenvue's sales for the first nine months of 2025 compared to 2024. The company also faces ongoing litigation, including a lawsuit from Texas' attorney general alleging that Kenvue and Johnson & Johnson concealed risks to children's brain development from acetaminophen, Tylenol's active ingredient.
Legal and reputational hurdles persist
Kenvue's portfolio has been dogged by legal battles even before the spinoff. Under Johnson & Johnson's ownership, its baby powder faced thousands of lawsuits accusing the company of selling asbestos-contaminated talc for decades-a claim Johnson & Johnson denies. A recent UK lawsuit revived these allegations, though Kenvue now produces its talcum powder with cornstarch. The lingering reputational damage, combined with regulatory scrutiny, has weighed on the brand's performance.
Executives tout 'complementary strengths' in $32bn revenue push
Despite the challenges, leadership from both companies framed the merger as a strategic opportunity. In a joint statement, executives highlighted the deal's potential to create a "global health and wellness leader," with combined 2025 sales projected at $32 billion. Kenvue shareholders would receive approximately $21 per share-$3.50 in cash and the remainder in Kimberly-Clark stock-valuing Kenvue at $48.7 billion. Kenvue's shares surged 17% in early trading to over $16 on the news.
The transaction, expected to close in the second half of 2026, aims to leverage Kimberly-Clark's distribution networks and Kenvue's brand recognition in over-the-counter medications and skincare. "With a broader product range and greater reach," the companies stated, "the combined entity will accelerate growth in a competitive consumer landscape."
Market reaction and road ahead
The divergent stock movements-Kenvue's rally versus Kimberly-Clark's drop-underscore the deal's high-stakes gamble. Analysts note that while the merger could bolster Kimberly-Clark's portfolio with Kenvue's healthcare brands, it also exposes the company to Kenvue's legal liabilities and regulatory risks. The success of the integration may hinge on whether the combined entity can reverse declining sales trends amid persistent inflation and shifting consumer preferences.
"Supplies have stabilized, but conservation remains essential."
Catalan Water Agency
