Johnson & Johnson to split?

Johnson & Johnson (NYSE: JNJ), the healthcare giant, on November 12, 2021 announced their wish to split the company into two public companies. This move would separate their consumer health division that sells Band-aid bandages and Johnson’s Baby powder from its pharmaceutical and medical devices. The move came as a shock and is one of the biggest announcements made in their 135-year history.

The aforementioned declaration created a lot of buzz owing to similar announcements this week by industrial giants- Toshiba and General Electrics. It is also in similar lines with its rivals’ announcements. Its rivals GlaxoSmithKline plc and Pfizer also aim to spin-off their joint consumer health business the following year.

Vice Chairman’s Remark

“This planned transaction would create two businesses that are each financially strong and leaders in their respective industries.The new Johnson & Johnson and the new consumer health company would each be able to more effectively allocate resources to deliver for patients and consumers, drive growth and unlock significant value,”

said Joaquin Duato, Vice Chairman, J&J (expected to become CEO in January)

Goals set after the split

  • Increase management focus, resources, agility and speed to effectively address differing industry trends and to better meet the needs of the new Johnson & Johnson and the New Consumer Health Company patients and consumers;
  • Further focus capital allocation based on the objectives of each independent company;
  • Provide each company with a compelling financial profile that more accurately reflects the strengths and opportunities of each business and, as a result, offers investors a more targeted investment opportunity; and
  • Align corporate and operational structures so each company is better able to drive growth and value creation.

This is still a ‘plan’ whether it will come into force or not depends on various parameters. One of the being a ‘Conference Call’ for all its investors to discuss on the announcement made. The investor webcast is scheduled today at 8:30 a.m. ET.

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