J&J investors will soon be able to exchange shares for Kenvue shares

Johnson&Johnson said Thursday that its shareholders will soon be able to exchange their shares for shares of kenvuewhich just spun off as an independent consumer health company two months ago.

J&J owns nearly 90% of Kenvue shares and plans to reduce its stake through an exchange offer that could start “as early as the coming days,” depending on market conditions, J&J CFO Joseph Wolk said during the second’s earnings call quarter of the company.

This process, also called a demerger, will allow J&J shareholders to exchange all or a portion of their stock for Kenvue common stock. J&J did not provide any further details about the planned offer.

However, Wolk said a spin-off would be the “most beneficial form of separation” for J&J. He added that after the demerger, Kenvue will most likely have a shareholder base wanting to own its shares.

When asked about J&J’s proposed exchange offering, Kenvue CEO Thibaut Mongon told CNBC’s Squawk on the Street that the company was “pleased with the way the IPO has been received by shareholders.”

“We see great consensus among our new investors in recognizing the potential of Kenvue, but I can tell you that we are fully prepared to launch as a fully independent company,” he said.

Kenvue shares fell after Thursday’s announcement, even though the company beat earnings and revenue estimates in its first earnings report since its IPO. Kenvue also introduced a quarterly cash dividend of approximately 20 cents per share for the third quarter, which will be paid to shareholders on September 7th.

J&J’s second-quarter results also beat expectations on Thursday, sending the company’s stock up 6%.

J&J did not previously announce whether it would dispose of its Kenvue interests through a spin-off or spin-off. The latter would mean giving out Kenvue shares to existing J&J shareholders rather than giving them an option to exchange.

The proposed timing of the offer came as a surprise.

Kenvue’s IPO filing in April said J&J had agreed to wait 180 days before selling or transferring its stake in the new company, which would have limited a potential spin-off to late October at the earliest.

The filing states that J&J could only do this with written permission from Goldman Sachs And JP Morgan Chase, the lead underwriters of the IPO.