The exchange offer will permit Johnson & Johnson shareholders to exchange some, all or none of their shares of Johnson & Johnson common stock for shares of Kenvue common stock at a 7% discount, subject to an upper limit of 8.0549 shares of Kenvue common stock per share of Johnson & Johnson common stock tendered and accepted in the exchange offer. If the upper limit is not in effect, tendering shareholders are expected to receive approximately $107.53 of Kenvue common stock for every $100 of Johnson & Johnson common stock tendered.

Johnson & Johnson will determine the prices at which shares of Johnson & Johnson common stock and shares of Kenvue common stock will be exchanged by reference to the arithmetic average of the daily volume-weighted average prices of shares of Johnson & Johnson common stock and Kenvue common stock on the NYSE during the three consecutive trading days ending on and including the second trading day preceding the expiration date of the exchange offer, which are expected to be August 14, 15 and 16, 2023, if the exchange offer is not extended or terminated.

The exchange offer is voluntary for Johnson & Johnson shareholders. No action is necessary for Johnson & Johnson shareholders who choose not to participate.

jnj.com - Johnson johnson launches exchange offer for separation of kenvue inc

I am a long term JNJ shareholder and trying to decide what to do. Due to tax reasons I will be continuing holding on to JNJ or KVUE.

I haven't read any detailed filings, except the above and a few media articles. Usually spin offs do better than the parent in many if these situations, most notable being Zoetis spun off from Pfizer. I sold off my Zoetis thinking it was not worth holding on to a very small position.

I an curious about where the talc liability will reside? Will JNJ retain the whole liability or will some of it be shared with KVUE.

Looking at KVUE valuation it is trading at a forward PE of 19. Management guidance is for 6% organic sales growth. KVUE has many strong brands like Band Aid, Nuetrogena, Tylenol, Aveeno and baby skin care, which have decent moats.

JNJ is trading at a forward PE of 16, with a forecast sales growth of 3% and EPS 3-5 year EPS growth of 4%. So JNJ is trading at a discount to KVUE, but is also forecast to have lower growth. Also the uncertainty around the talc liability is likely to be keep valuations suppressed until it is finally settled.

Consumer staples companies like PG and CL trade at much higher forward PEs (25 - 27 )than large cap pharma companies. If KVUE has no talc liability and performs as well as PG and CL, it too may get rerated.