(Bloomberg) -- The U.S. regulatory and tax environment would make it difficult to pursue a big merger involving Johnson & Johnson’s consumer unit, which the conglomerate is planning to spin off next year, the company’s financial chief said. 

The U.S. Justice Department and Federal Trade Commission have signaled that “bigger is not necessarily better,” Chief Financial Officer Joseph Wolk said in an interview. “When you are potentially combining consumer products companies, I think there’d even be more scrutiny here.” 

J&J announced in November that it planned to spin out its consumer unit from its more profitable drugs and medical devices business. Wolk said J&J is considering multiple pathways for the separation and still expects to execute it in 2023.

GlaxoSmithKline Plc, which is unloading its consumer unit, said earlier this month that it rejected an offer from Unilever Plc that valued the business at about $68 billion. The approach has made Wall Street all the more curious about how J&J will ultimately separate out big brands such Neutrogena skin products, Tylenol and Motrin painkillers, Listerine mouthwash and Band-Aid.

Based in the U.K., Glaxo and Unilever face a different environment, Wolk said. “If anything, my conviction meter went up a little bit with respect to just how valuable these assets could be out in the open market,” he said. 

J&J is making headway on the spinout, Wolk said. In the first half of the year, it will appoint leadership to the new consumer entity, and at the mid-year mark it will reveal a company name and the location of its headquarters, Wolk said. J&J will give some financial details for the new company toward the end of 2022, he said. 

Wolk made the comments after J&J released its forecast for 2022 adjusted earnings and revenue that beat analysts’ estimates. Fourth-quarter profit of $2.13 a share beat estimates, while revenue narrowly missed. 


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