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3:49 PM · 12 November 2021

Johnson & Johnson to split into two companies

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Johnson & Johnson (JNJ.US) announced in a statement that it intends to split into two companies, dealing separately with the production and sale of care products, including plasters, soaps and shampoos, and the pharmaceutical and medical segment (including vaccines for COVID). The company plans to complete the entire restructuring process within 18 to 24 months. Currently, the market has reacted positively to the news of the demerger, with shares currently up nearly 1.5%.

 

Alex Gorsky, J&J’s chief executive, said that separation is “the best way to accelerate our efforts to serve patients, consumers, and healthcare professionals, create opportunities for our talented global team, drive profitable growth, and — most importantly — improve healthcare outcomes for people around the world”.

 

The company wants to focus on pharmaceuticals and medical devices, and has decided to spin off an entity focusing on consumer products, most likely through a share offering. The whole transaction is to be tax-free, and the dividend level is to remain unchanged.

 The company's shares opened with a large gap and are now breaking out of the consolidation zone (orange box). For the demand side, the key is to maintain the lower limit of the consolidation zone, near the level of $162 per share. A bottom breakout from this level could lead to a deepening of declines to the area of $157. Source: xStation 5

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