Barrons·2025-11-04 20:46Core Viewpoint - Kimberly-Clark plans to acquire Kenvue, the maker of Tylenol, in a $48.7 billion deal, but the transaction faces significant investor skepticism and potential opposition from activist investors [2][4][7]. Group 1: Stock Performance - Kimberly-Clark's stock fell 1.7% to $100.55 after a 15% drop on the previous Monday, marking a new 52-week low [3][4]. - The stock has been underperforming over the past one, five, and ten years, significantly below its 52-week high of $150 [3]. Group 2: Investor Sentiment - The merger is one of the worst-received major deals in recent years, with concerns over Kenvue's weakening sales and potential legal liabilities related to Tylenol and talc [4][7]. - An activist investor could challenge the deal, which requires majority shareholder approval from Kimberly-Clark and is set to close in the second half of next year [5][7]. Group 3: Deal Structure and Financials - Kimberly-Clark is offering a combination of stock and cash valued at approximately $18.15 per Kenvue share, which includes nearly 0.15 shares of stock and $3.50 in cash [6]. - The deal could leave the combined companies with over $20 billion in debt, nearly three times projected EBITDA [9]. Group 4: Market Dynamics - Kenvue's stock is trading at about a 11% discount to the current deal value, indicating a wider arbitrage spread than typically expected for a deal closing in about a year [8]. - The anticipated closing in the second half of 2026 may be optimistic due to necessary regulatory approvals, including from China [8].