Project Description

Johnson and Johnson Consumer Spin-off Notes

November 12, 2021 Update

On November 12, 2021, Johnson & Johnson (JNJ) announced that is will spin-off its consumer business ($15BN of revenue) within 18-24 months. The new consumer company will be named at a later date. The remaining company will consist of the pharma and med tech business (~$77BN of revenue). The thesis is that the consumer business will trade closer to a consumer multiple (P&G trades at an EV/EBITDA multiple of 17.6x while J&J trades at 13x). The transaction looks fairly interesting. LEAPs may be an interesting strategy as well as JNJ has low volatility so its options will likely be attractively priced.