Johnson & Johnson is preparing to split itself into two companies. Such splits – as in IBM Pfizer and General Electric – are designed to flood value. The market response proves that there is enthusiasm, not in the sky yet. The company’s share is up 2%. In Pfizer’s split – outsourcing the generic activity and merging it with Mylan into a company called Viatris, it helped. This made Pfizer itself more focused on source drugs and more growing when Pfizer also later received a gift – developing a vaccine for Corona and now also a drug for Corona and growth accelerated and at the same time the stock price went up.
At IBM, the IT division was recently split. At this stage, the value flood does exist, but it is low (about 5% -10%). But we will have to wait and see if the goal is achieved – to get better pricing on IBM that for the first time in a decade will become a growing company. Also in her case, put out a body whose sales are going down, to get a growing company.
The split in Johnson is different. Its activities are growing, albeit at a lower rate. The intention is that the market will better understand the focused companies and the natural discount on investing in diversified entities will disappear. Johnson will split into two public companies – one that will focus on consumer products including skin care, baby talcum powder and bandages. The second will develop and sell prescription drugs and medical supplies. I mean to make it simple – a consumer goods company and a pharmaceutical company. Two targeted companies that will have higher pricing on Wall Street compared to the current pricing – so at least Johnson executives expect.
“Throughout history, Johnson & Johnson has demonstrated diversity and flexibility as well as being able to deliver results that benefit all stakeholders in the group. We must continue to develop our business to deliver value today, tomorrow and for decades to come,” the group said. In our opinion, to move forward is to ensure stable long-term growth and better compliance with the requirements of consumers and patients, with the consumer products division and the pharmaceutical company operating separately. ”
It will not happen tomorrow morning. The plan of the company’s management is for a move that will be completed in the span of 18-24 months. The pharmaceutical division will maintain the existing name – Johnson & Johnson. The new CEO Joaquin Duato will head this company (for more on the split in Johnson)
This week, General Electric announced its intention to split into three companies (for more)
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