Johnson & Johnson
The company believes these changes could take 18 to 24 months before it's finally complete. Currently, Johnson & Johnson is one of the largest publicly traded companies and a component of many major indices.
In a statement, outgoing CEO Alex Gorsky said: "Following a comprehensive review, the board and management team believe that the planned separation of the consumer health business 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 consumer products unit will include iconic brands like Band-Aid, Aveeno, and Neutrogena skincare products, and Listerine. It generates about $15 billion in revenue per year and would also take on litigation risk over allegations of baby powder causing or contributing to cancer.
The pharmaceutical business is growing faster and would include prescriptions drugs, medical devices, and vaccines. It would retain the Johnson & Johnson name and also include the company's advanced technologies like AI and robotics. The company's new CEO, Joaquin Duato, would take over this segment as well. It hasn't picked a new name for the consumer business. Pharmaceuticals generated about $70 billion in revenue over the last year.
It's expected that the split will create more shareholder value. Consumer products and pharmaceuticals likely appeal to different types of investors and they could unlock higher multiples trading as independent entities.
Outgoing CEO Alex Gorsky will remain as executive chairman of the new Johnson & Johnson. The company also plans to keep its current dividend of 2.6% which is welcome news among the income investors who treasure the stocks for its long-term record of dividend growth and payments.
The Johnson & Johnson news also follows the news that General Electric
