Kimberly-Clark: Dividend darling suffers double-digit losses – here's why

Amid the White House-initiated controversy surrounding the painkiller Tylenol and its link to autism, consumer goods giant Kimberly-Clark is acquiring its manufacturer, Kenvue. Including Kenvue's debt, the purchase price amounts to $48.7 billion (€42.3 billion). This proved a bit too steep for investors, and Kimberly-Clark's stock price fell by 12 percent.

Part of this will be paid in Kimberly-Clark shares, so the final amount could still be different.

In September, US President Donald Trump warned pregnant women against taking the acetaminophen drug Tylenol, citing an alleged risk of autism. "Don't take Tylenol," Trump repeatedly appealed to pregnant women in front of TV cameras at the White House. Kenvue's stock has lost about a fifth of its value since this appearance.

The active ingredient in Tylenol, known in the US as acetaminophen, is identical to paracetamol. At the end of October, the state of Texas took legal action against Kenvue, accusing them of concealing a link to autism.

Kenvue emphasizes that scientific data shows no proven link between autism and taking the medication. Experts also contradicted Trump's claims. In a conference call following the merger announcement, Kenvue CEO Kirk Perry reaffirmed that the company's products are safe. Kimberly-Clark CEO Mike Hsu said they had weighed the risks and consulted with experts.

Two billion dollars in savings

Kenvue, with brands such as Neutrogena, Listerine, and Aveeno, was spun off from Kimberly-Clark's competitor Johnson & Johnson in 2023. Kimberly-Clark (whose brands include Kleenex and Huggies) anticipates annual savings of more than two billion dollars through the merger. However, restructuring costs of approximately 2.5 billion dollars are expected in the first two years. Following the merger, Kimberly-Clark shareholders are expected to hold around 54 percent of the company, with Kenvue shareholders holding the remainder.