Johnson & Johnson plans to split into two companies, separating consumer health business

Johnson & Johnson announced Friday that it would separate its consumer business from its pharmaceutical- and medical device operations. This sent shares soaring in premarket trade.
There will be two companies following the separation. One company will focus on its household products like Aveeno and Neutrogena skincare products and Listerine and the other on its more risky prescription drugs and medical division. This includes the Covid-19 vaccine division. The company's consumer products division will inherit lawsuits stemming out of claims that Johnson's Baby Powder can cause cancer. This is an allegation the company strongly denies.

Johnson & Johnson's rich history has shown that it can deliver results that are beneficial to all stakeholders. We must continue to evolve our business to provide value today and tomorrow," said Alex Gorsky, outgoing CEO.

According to the company, it expects to close the transaction within 18 to 24 months. The company's pharmaceutical division will retain Johnson & Johnson as its name and Joaquin Duato, J&J's incoming CEO, will be at its helm. Duato will assume the role as planned in January.

Premarket trading saw shares of Johnson & Johnson rise by more than 4% after the announcement.

Johnson & Johnson was already going through a major change, with Alex Gorsky, the CEO of the company, announcing that he would resign in January. The company announced Friday that Joaquin Duato will be the successor to Gorsky.

The company also stated that it would maintain its total dividend at least at the current level following the change. J&J currently has a yield divided of 2.6%.

This announcement follows General Electric's.

Wall Street Journal first reported the news.

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