Ken Paxton, Texas’s attorney general, filed a motion with a state court to stop Kenvue’s planned dividend of $398 million that was scheduled to be paid on November 26, 2025. The motion cites the state’s lawsuit, filed on October 28, 2025, which accuses Kenvue of concealing risks associated with Tylenol use during pregnancy that could lead to autism and ADHD in children.
The motion follows Kenvue’s Q3 2025 earnings announcement on November 3, 2025, when the company reported adjusted diluted earnings per share of $0.28—$0.01 above analyst consensus—while revenue of $3.76 billion fell 3.5% year‑over‑year to $3.76 billion, missing expectations by $70 million. The revenue shortfall was driven by weakness in over‑the‑counter products and inventory adjustments across all segments.
The dividend would have distributed nearly $400 million to shareholders. If the court grants the motion, the payment would be suspended, affecting shareholder returns and potentially signaling deeper legal and reputational risks for Kenvue, especially given its high payout ratio that exceeds 100%.
Kenvue is in the process of being acquired by Kimberly‑Clark for $48.7 billion, a transaction announced on November 3, 2025. The Texas AG’s action is viewed as a protective measure to preserve assets that could be claimed in the lawsuit, thereby safeguarding the merger’s value and completion prospects. The acquisition announcement has already influenced market sentiment, with Kenvue’s market value increasing after the news while Kimberly‑Clark’s market value decreased due to litigation concerns.
Kenvue has not yet issued a statement on the motion. CEO Kirk Perry emphasized that the company remains focused on its four operating priorities and is confident in meeting full‑year guidance, noting that the company’s operational execution has kept it on track despite the litigation backdrop.
The dividend motion highlights the financial strain that litigation could impose on Kenvue’s cash flow. The company’s Q3 results show a mix of strength and weakness: earnings beat driven by cost discipline and margin expansion to 61.2% from 60.7% year‑over‑year, while revenue miss reflects declining organic sales and inventory adjustments. These dynamics underscore the challenges Kenvue faces as it navigates the lawsuit and the pending acquisition.
The announcement of the acquisition dominated market reaction, with Kenvue’s market value rising after the news and Kimberly‑Clark’s market value falling due to concerns over potential liabilities. The AG’s motion is likely to be viewed as a protective measure for the merger, but it also highlights the legal risks that could influence the final deal terms.
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