Johnson & Johnson (JNJ), the global healthcare giant, is offering its shareholders a rare opportunity to make a quick profit by exchanging their shares for Kenvue (KVUE), the consumer health spinoff that owns brands like Band-Aid, Listerine, and Tylenol. The exchange offer, which is due to expire on August 18, 2023, is the largest of its kind ever and has a special feature that favors small investors. Here’s how you can take advantage of this deal and earn more than $1,000 in two weeks.
What is the J&J Exchange Offer?
The J&J exchange offer is a tax-free transaction that allows J&J shareholders to swap their shares for Kenvue shares at a discount. J&J took Kenvue public in May 2023 and still owns about 80% of the company. J&J wants to divest its stake in Kenvue and use the proceeds to buy back its own shares.
The exchange offer is voluntary, meaning that J&J shareholders can choose whether to participate or not. If they do nothing, they will keep their J&J shares. If they opt in, they will receive Kenvue shares based on a fixed exchange ratio that will be determined by the average prices of the two stocks in a three-day period from August 14 to August 16.
The exchange ratio will be set at a 7.5% discount, meaning that J&J shareholders will receive $107.50 worth of Kenvue shares for every $100 worth of J&J shares they exchange. For example, if the exchange ratio is 8 Kenvue shares for 1 J&J share, and Kenvue trades at $25 and J&J at $200, then J&J shareholders will receive $200 worth of Kenvue shares for every J&J share they exchange, resulting in a $12.50 profit per share.
What is the Odd-Lot Rule?
The odd-lot rule is a special feature of the J&J exchange offer that gives priority to small investors who own less than 100 shares of J&J. These investors are called odd-lot holders and they can exchange all of their shares for Kenvue without being subject to proration.
Proration means that if the exchange offer is oversubscribed, meaning that more J&J shares are tendered than the number of Kenvue shares available, then the exchange ratio will be reduced for all participants except odd-lot holders. For example, if the proration factor is 50%, then only half of the J&J shares tendered by regular holders will be exchanged for Kenvue.
The odd-lot rule gives odd-lot holders an advantage over regular holders because they are guaranteed to receive the full exchange ratio regardless of the level of participation. This means that they can lock in the 7.5% discount and make a profit by selling their Kenvue shares after the exchange.
How to Earn $1,000 in Two Weeks?
To earn $1,000 in two weeks with the J&J exchange offer, you need to buy 99 shares of J&J before August 18 and opt in to the exchange offer. You can buy J&J shares through any online broker or trading platform. The current price of J&J is about $173 per share, so you need to invest about $17,000.
Once you buy your J&J shares, you need to contact your broker or custodian and indicate your intention to participate in the exchange offer. You need to submit all of your 99 shares for exchange and specify that you are an odd-lot holder. You can find more information about how to participate on the official website of the exchange offer: www.JNJSeparation.com.
After the exchange offer expires on August 18, you will receive your Kenvue shares within a few days. You can then sell your Kenvue shares on the open market and pocket your profit. The amount of profit you make depends on the exchange ratio and the market prices of the two stocks at the time of sale.
Based on the current prices of J&J and Kenvue, and assuming an exchange ratio of 8 Kenvue shares for 1 J&J share, you can expect to make about $12 per share or about $1,200 in total. This is a return of about 7% in two weeks, which is much higher than what you can get from most other investments.
Of course, this profit is not guaranteed and it may vary depending on how the prices of J&J and Kenvue change during and after the exchange offer period. There is also a risk that the exchange offer may be canceled or modified by J&J for any reason. Therefore, you should do your own research and analysis before deciding whether to participate in the exchange offer or not.
