Kimberly-Clark completes acquisition of Tylenol maker Kenvue. What to expect next
Kimberly-Clark completed its blockbuster acquisition of Tylenol maker Kenvue on Monday, giving investors new reasons to believe in the company behind Huggies, Kleenex and Cottonelle. This acquisition expands Kimberly-Clark’s reach in the health and wellness category at a time when consumers are placing more importance on a healthy lifestyle. And this is one of the main reasons why Jim Cramer added the title to the Club’s portfolio in early September. Since then, we have added to the position three times, including twice in October below $98 per share. Shares of Kimberly-Clark rose 0.3% during Monday’s session, closing at $108.25. Given the stock’s strong performance of late, Jim said during Monday’s morning meeting that he would wait for weakness before considering buying more shares. The Kenvue buyout closed almost a year to the day after its announcement, valuing the company at nearly $49 billion, including debt. On Monday, Kimberly-Clark reaffirmed its financial goals for the deal, including a $1.9 billion reduction in costs and expenses over three years. It also includes $500 million in additional profits from increased revenue, partially offset by $300 million in reinvestments. Still, questions remain about how Kimberly-Clark will integrate Kenvue, handle higher input costs and handle legal issues surrounding the popular over-the-counter painkiller Tylenol. Kimberly-Clark CEO Michael Hsu joined Jim on CNBC earlier Monday, where he laid out his vision for the combined company’s future and addressed these key debates. Accelerate Kenvue’s Growth One of Kimberly-Clark’s highest priorities is to accelerate Kenvue’s growth by strengthening key elements of the business. Jim has previously highlighted weaknesses in Kenvue’s operations, particularly its e-commerce strategy, which creates an opportunity for Kimberly-Clark to step in and make improvements. “We’ve really worked over the last 10 years at (Kimberly-Clark) to fundamentally build what I call a world-class CPG capability,” Hsu said, using an abbreviation for consumer packaged goods, or everyday products that consumers use and replace regularly. These efforts included strengthening Kimberly-Clark’s retailer relationships, digital capabilities, advertising and product innovation. Although Kimberly-Clark’s work is not done in these areas, Hsu said the company is on stronger footing than Kenvue. Kenvue, formerly Johnson & Johnson’s consumer health division, became a standalone company in May 2023. “I would still say we’re in the early stages of developing this capability, but I think we’re further along than Kenvue,” Hsu said. “And I think by combining, we can bring some of those capabilities together and help us accelerate our growth.” Hsu also sees considerable room for expansion in Kenvue’s existing product categories, which he described as “very, very underdeveloped.” Besides Tylenol, Kenvue’s brands include Band-Aid, Zyrtec, Neutrogena and Listerine. “There’s still a lot of vegetation left in these hills,” he said. KMB YTD has boosted Kimberly-Clark’s stock performance since the start of the year. Coping with inflation Kimberly-Clark also has another challenge: managing rising input costs due to the war in Iran, while keeping prices affordable for cash-strapped low- and middle-income consumers. Hsu acknowledged that it is a delicate balancing act, given the risk that high prices will cause customers to turn to cheaper alternatives. Nonetheless, Hsu described the current situation as manageable, especially given what Kimberly-Clark faced in the wake of the Covid-19 pandemic, when the U.S. inflation rate reached multi-decade highs. “In post-Covid, the inflation that we faced, at Kimberly-Clark alone, was about $3.4 billion over two years,” Hsu said. “We’re talking, at this point, between the two companies combined, a few hundred million. Even though it’s significant, we know how to manage it.” Hsu said the company generally aims to offset rising raw material costs through pricing over time. “We are very sensitive to the plight of the average consumer. We know that middle- and low-income consumers are strapped for cash and trying to make difficult choices. They are very discerning,” Hsu said. For Hsu, that means maintaining price discipline. “Most importantly, I think we’re really focused on reducing our costs so we can afford to provide great products at an affordable price.” Touting Kimberly-Clark’s focus on value, Hsu mentioned that the company recently brought some innovation to its premium Huggies Snug & Dry. The technology improves the softness of the diapers. “We put our best technology into our premium diapers,” Hsu said. “We know that consumers really value performance and are very demanding about it. And that’s where we want to earn the trust of the average consumer.” Tylenol’s Legal Troubles By acquiring Kenvue, Kimberly-Clark also inherits legal and reputational risks compared to Tylenol, which has faced litigation and controversy over claims regarding its use during pregnancy. Last July, a federal appeals court resurrected more than 500 lawsuits alleging that prenatal Tylenol use contributed to autism or ADHD in children, citing improper exclusion of expert testimony. Kenvue challenged the decision, but about two weeks ago a U.S. appeals court said it would not reconsider the decision. Hsu defended the painkiller and fever, saying Kimberly-Clark conducted extensive research and consulted with medical and legal experts when pursuing the acquisition. In September 2025, more than a month before Kimberly-Clark announced the Kenvue deal, the Trump administration established an unproven link between autism and pregnant women’s use of Tylenol’s active ingredient, acetaminophen. Kenvue shares were crushed that month and continued to decline through October. Then the takeover was revealed. “Our view is that the science supporting the effectiveness and safety of Tylenol has been proven, I think, consistently, even with several new studies published over the past year,” Hsu said. “We’re really happy to be on the right side of science.” Hsu said the high controversy in 2025 had a “modest” impact on Tylenol sales at that time, but he argued the brand had recovered and had momentum on its side. He pointed out that recent consumption data was up double digits. Hsu also highlighted Tylenol with Naproxen, which in July became the first and only FDA-approved over-the-counter pain reliever combining acetaminophen and naproxen sodium. Aleve, which is owned by Germany’s Bayer, is a brand of naproxen sodium. Protecting the Dividend and Balance Sheet Kimberly-Clark’s dividend is another reason why Jim likes this stock. The company is a “dividend aristocrat,” meaning it has increased its dividend payout for at least 25 consecutive years. In fact, it actually falls into the more rarefied “dividend king” territory, having increased its payouts for at least 50 consecutive years. Based on Monday’s close, the stock has a dividend yield of 4.73%. As Kimberly-Clark issued debt to help finance the cash-and-stock buyout of Kenvue, Jim asked Hsu if the company’s dividend was safe. Hsu was quick to assure investors that this was the case. “Oh, yeah,” Hsu replied. This commitment is especially important to income-oriented investors who have long viewed Kimberly-Clark as a reliable dividend-paying stock. “We believe we will create generational value on shareholder-friendly terms,” Hsu said. “I think by year two, we expect earnings to be accretive and reduce our debt to around 2.0,” Hsu added. “And so our goal is…to maintain our dividend aristocracy.” Hsu also said Kimberly-Clark intends to maintain its Simple A credit rating. (Jim Cramer’s Charitable Trust is long KMB. See here for a complete list of stocks.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after a trade alert is sent before buying or selling a stock in his charity’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY OBLIGATION EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
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jack colman
**Jack** is a staff journalist and digital content writer at **DailyVoxa**, specializing in breaking news, technology, artificial intelligence, business, and global affairs. He is passionate about transforming complex topics into clear, accurate, and engaging stories that help readers stay informed.With a strong focus on fact-based reporting and thorough research, Jack monitors developing events, analyzes reliable sources, and delivers timely news with clarity and context. His work emphasizes accuracy, transparency, and editorial integrity while avoiding sensationalism.At DailyVoxa, every article written by Jack follows the publication's Editorial Policy, Fact-Checking Policy, and Ethics Policy. He is committed to providing trustworthy journalism that empowers readers with reliable information and meaningful insights into the stories shaping the world.
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