Last week, Kimberly-Clark announced plans to acquire Kenvue Inc., a global consumer health leader and the maker of consumer health products like Tylenol, Aveeno, Stayfree and Listerine, capping off a transformative year for the maker of Huggies diapers and Depend adult incontinence items.

Earlier this year, the Dallas, TX-based company made another major move entering into a joint venture agreement with Brazil’s Suzano, which spun off the assets of its International Family Care and Professional (IFP) business including its Scott, Kleenex and Wypall global brands. Under the terms of this agreement, these brands will be licensed to the venture under a long-term agreement. Additionally, Suzano, the world’s largest maker of pulp, will have the option to purchase K-C’s remaining 49% ownership in the company at certain specified times and subject to certain conditions.

According to K-C CEO Michael Hsu, both moves were part of a larger goal to give K-C exposure to higher growth, higher margin categories, which are in synch with its Powering Care Transformation Strategy.

“That’s why we made some of the portfolio moves with our international tissue business, private label, PPE, some of those things,” he says. “But —and then as we did an exhaustive diagnostic of the whole consumer packaged goods (CPG) universe and beyond the CPG universe—everything led us to health and wellness because the macro trends of the global population aging. The U.S. population and developed markets are clearly aging, but even developing markets, are going to see that, and you’re starting to see that impact.”

The combination of K-C and Kenvue creates a preeminent consumer health and wellness leader with combined sales of approximately $32 billion and strong positions in baby care with brands like Huggies diapers, Johnson’s baby, Aveeno baby, Pull-Ups and Desitin; women’s health with Poise, Kotex, Stayfree, o.b. and Motrin and active aging with Depend, Rogain and Zyrtec. The new company will have 10 billion-dollar brands that touch more than 10 billion people across every stage of life.

“Those brands will be fueled by science-backed pioneering innovation that will continue to deliver new technology for consumers,” Hsu adds. “To get the most out of these brands, we will leverage K-C brand building and commercial engine. We’ve already proven we can do it at K-C and we’ll leverage that experience as we bring in Kenvue. All of this leads to an attractive financial profile with greater scale.”

Kimberly-Clark and Kenvue have identified approximately $1.9 billion in cost synergies and approximately $500 million in incremental profit from revenue synergies, partially offset by reinvestment of approximately $300 million. The cost synergies are expected to be captured in the first three years following closing, and the revenue synergies are expected to be captured within four years post close.

“We believe that Kenvue is the perfect partner for Kimberly-Clark,” Hsu says. “We share common values and a common vision to deliver superior care for billions around the world. Our combined brands are enduring trust and carry deep meaning.”

Calling Kenvue

Kenvue completed its spin-off from Johnson & Johnson in August 2023 two years after J&J announced it would separate its consumer health business. In July, Kenvue announced it was taking a series of steps to improve its performance and unlock shareholder value. Among these actions was the appointment of Kirk Perry as interim CEO as well as a strategic review of the company’s complete operations. Soon after this announcemen, K-C and a number of other potential buyers came calling, according to reports.

“Since launching as a stand-alone company, Kenvue has made important progress to strengthen our foundation,” says Perry, who will continue to lead the Kenvue business post merger. “Thanks to the contributions of Kenvue’s talented team, we are now well positioned to deliver on our tremendous potential as part of Kimberly-Clark.”

The $40 billion acquisition of Kenvue comes amidst controversy over its leading Tylenol acetaminophen brand and its alleged links to autism alleged by the Trump Administration earlier this fall. Kenvue, along with many mainstream medical groups, has repeatedly refuted these claims.

In a joint statement with Kenuve, K-C has affirmed it has evaluated all of the risks and opportunties associated with the merger and is working with some of world’s foremost scientific, regulatory, legal and other experts.

A Leaner K-C

In 2024, K-C launched it Powering Care Transformation Strategy, a corporate initiative designed to focus on higher-growth, higher margin segments line North American and International Personal Care, drive growth through innovation, improve cost management and reinforce purpose. According to Hsu, this has created a faster, leaner, pure-play personal care company with industry-leading operational and brand momentum.

“As we’ve executed Powering Care, both on the portfolio and operations side, we’ve had our eye on how we can take this transformation to the next level. We’re wired now for this next major step forward,” he says. “We have the playbook, the experience and the team in place. We’re no strangers to driving discipline, quality, productivity and efficiency. It’s what we focus on every day. We’ll unite these brands and the best scientific minds in a new home that will drive a relentless focus on innovation and rigor.”