Texas Attorney General Ken Paxton asked a court on Wednesday to block the maker of Tylenol from issuing a dividend payment to shareholders later this month, so that Texans will not lose out on the damages that may be owed to them in numerous lawsuits related to the pain reliever.
The motion comes over one week after Paxton sued Kenvue and former parent company Johnson & Johnson for concealing the acetaminophen drug’s links to autism and ADHD.
Kenvue is scheduled to pay an estimated $400 million dividend on Nov. 26. The Republican attorney general argued the latest quarterly payment would violate a state law banning fraudulent transfers.
“I will not allow Big Pharma to ruin the lives of Texans with their lies and then refuse to pay the bill when it’s brought to account,” Paxton said in a statement.
“Kenvue very well may be insolvent because of its own reckless actions, and it should no longer pay fraudulent dividends as a way to avoid paying future civil penalties,” he added. “I will be relentless in working to secure a just outcome when companies hurt our citizens, and part of that process is ensuring that companies actually pay Texas when they break the law.”
In the filed motion, Paxton said that because Kenvue faces billions of dollars in possible damages, the company needs to keep the $400 million on hand to pay back plaintiffs who live in Texas.
“Faced with tens or hundreds of billions of dollars in liabilities that are not recorded in the company’s audited financials, Kenvue has announced its intention to issue a massive $400 million dividend this month, i.e., to funnel $400 million in cash to its shareholders instead of keeping it to satisfy future judgment creditors like the State of Texas,” the court document states. “It is hard to think of a more classic example of a fraudulent transfer than this.”
Kenvue’s market capitalization is currently valued at $31 billion, down from $47 billion in May. By comparison, Johnson & Johnson’s market capitalization is roughly $450 billion.
“Although these seem like high capitalizations, as detailed below, litigation can easily absorb billions in short order,” the motion reads. “After all, in 2023—that year alone—Johnson & Johnson spent nearly seven billion dollars on litigation expenses.”
Kenvue spun off from Johnson & Johnson as an independent entity in August 2023, as Tylenol became mired in a large number of legal battles.
KIMBERLY-CLARK TO BUY TYLENOL MAKER KENVUE FOR $48.7 BILLION
Texas became the first state to sue the companies behind Tylenol over one month after the Trump administration warned pregnant women to refrain from taking the pill based on evidence that showed children have a higher chance of developing autism if their mother took Tylenol during pregnancy. Other states may file similar lawsuits.
Earlier this week, Kenvue was bought by Kleenex owner Kimberly-Clark in a pending $48.7 billion acquisition. If the transaction is approved next year, the newly combined company would be able to make up to $32 billion in annual net revenue.
