Johnson & Johnson Plans to Split Into Two Companies

Healthcare conglomerate Johnson & Johnson has set plans in motion to split into two publicly-traded companies.

J&J to Split Into Two Companies

Johnson & Johnson, one of the world’s largest healthcare conglomerates, has announced earlier today that it plans to separate its consumer products business from its pharmaceutical and medical device operations. Thus, creating two publicly-listed companies in the process.

According to the announcement, the company’s household products unit, Listerine, Aveeno and Neutrogena skincare products, and maker of Band-Aid bandages will operate under one company. Meanwhile, the second company will handle the riskier but faster-growing division that manufactures and sells prescription drugs and medical devices.

Johnson & Johnson’s outgoing CEO Alex Gorsky stated that “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.”

Johnson & Johnson said it intends to complete the splitting process over the next 18 to 24 months. Per the announcement, the pharmaceutical and medical device division will continue to use the name Johnson & Johnson and also gets to keep the incoming CEO, Joaquin Duato, as the head. However, they are yet to come up with a name for the publicly traded consumer business.

J&J Rally Following Splitting Announcement

Investors have taken kindly to the news of Johnson & Johnson splitting into two companies, with the stock price rallying by more than 1.2% since the market opened. At press time, JNJ is trading at $165.08, up by 1.24% over the past few hours.

JNJ could rally higher over the coming days and weeks as the company begins to provide more details into the splitting process. Year-to-date, J&J is up by only 6.8% as the company currently faces lawsuits that could cost it billions of dollars.