By skyforbes They’re dropping $48.7 billion (cash + stock) to buy Kenvue ($KVUE) — that’s the company behind Tylenol, Band-Aid, Listerine, Zyrtec, Neutrogena, Johnson’s Baby, etc. Basically, they raided Johnson & Johnson’s medicine cabinet.
KMB already owns Huggies, Kleenex, Kotex, Cottonelle. Add Kenvue’s lineup and you’ve got a monster with over $32 billion in annual revenue touching every corner of the household aisle.
What just happened
Deal terms: $3.50 cash + 0.14625 shares of KMB per KVUE share.
KVUE shot up on the headline.
KMB cratered double-digits because analysts love to panic about debt and dilution.
That’s the entry. The fear is temporary; the synergy is permanent.
This is the exact same movie we’ve seen a hundred times: big staple buys a complementary portfolio, market screams “overpay!” then six months later it rerates after synergy numbers show up in EPS.
Why this deal actually makes sense
Management is guiding for around $2 billion a year in cost synergies. Even if they hit half, that’s a meaningful margin bump on $32 billion in revenue.
The product overlap is clean: tissues + cold medicine, diapers + baby lotion, bath tissue + skincare. Cross-sell city.
One marketing engine, one distribution network, better ad ROI.
KMB already runs a tight supply chain; integration risk is real but manageable.
Why the market’s reaction is wrong
The Street is obsessing over debt and short-term dilution, ignoring the long-term free cash flow power. KMB throws off cash like crazy. Even post-deal they can delever inside two years if they care to. Once leverage normalizes, the multiple expands again.
This company isn’t betting on hype. It’s betting on brand gravity. Consumers are not cutting back on diapers, tissues, or painkillers because of macro headlines.
My plan
I’m accumulating shares and calls while sentiment is garbage. I expect a slow rerate over the next 12–18 months as:
- Deal approvals roll in.
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Early synergy savings show up in SG&A.
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KMB reiterates the dividend (which they absolutely will).
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Debt ratios improve quarter by quarter.
Bear arguments (and why I don’t care)
Litigation overhangs: already priced into KVUE, KMB knew what it was buying.
Integration risk: that’s every big merger ever; KMB’s ops team is seasoned.
EPS dilution: near-term pain, long-term gain.
Final thoughts
KMB just turned itself from a sleepy tissue company into a global health-and-wellness powerhouse. The market hates change; that’s why there’s opportunity.
When everyone realizes KMB now owns the medicine cabinet and the bathroom shelf, today’s dump will look like free money.
I’m long $KMB because the brands are unstoppable, the cash flow is sticky, and the selloff is overblown. Not financial advice — just a guy connecting obvious dots.