Kimberly-Clark buys Tylenol-maker Kenvue in more than $40bn deal

Kimberly-Clark is set to buy Kenvue, the maker of Tylenol, which has faced attacks from the White House and flagging demand for its products.

The more-than $40bn (£30.5bn) cash-and-stock deal would create a consumer giant, with a portfolio of some of the world’s most commonly stocked bathroom and medicine cabinet items.

Kimberly-Clark makes Kleenex, Huggies nappies and some of the biggest toilet paper brands in the US. As well as Tylenol, Kenvue is known for Band-Aid, Zyrtec, Benadryl, Neutrogena and Aveeno.

Both firms have been under pressure as price-conscious households increasingly turn to cheaper, store-brand versions of their products.

Johnson & Johnson spun off Kenvue as a standalone company in 2023, separating its faster growing, more profitable medical technical and pharmaceutical business from its consumer products.

Executives argued at the time that a narrower focus would help each company flourish.

But Kenvue’s business and its shares have struggled, down almost 30% in a year, making it a target of activist investors, who have bought up stakes and pushed the firm for changes, including a possible sale.

The firm’s shares sank last month, when the Trump administration publicly linked use of Tylenol during pregnancy to autism, despite what scientists say is inconclusive evidence.

Sales in the first nine months of the year are down almost 4% compared with 2024.

In their announcement of the deal, executives said the companies had “complementary strengths” and a combination would accelerate growth. They said they expected to complete the transaction in the second half of next year.

Together, the firms are on track to generate $32bn in sales in this year, they said.

“With a broader product range and greater reach, the combined company will be a global health and wellness leader,” they said.

The cash-and-stock deal values Kenvue at about $48.7bn, the companies said.

They said Kenvue shareholders would receive about $21 per share, including $3.50 in cash and a portion of shares in Kimberly Clark.

Kenvue shares jumped 17% in early trading to more than $16.

But shares in Kimberly-Clark sank more than 10% in a sign of investor doubts about the deal, which exposes the firm to new risks.

Kenvue is facing a lawsuit from the Texas attorney general, claiming that Kenvue and Johnson & Johnson hid alleged dangers that the drug posed to children’s brain development.

Kenvue brands, while under the Johnson & Johnson umbrella, had also faced crisis in recent years over lawsuits linking use of its baby powder to cancer.

A recent lawsuit in the UK picked up on those claims, accusing Johnson & Johnson of knowingly selling baby powder contaminated with asbestos for decades.

The company, which now makes its talcum powder with cornstarch, has denied the allegations.