The Food and Drug Administration on Monday approved Merck‘s new vaccine designed to protect adults from a bacteria known as pneumococcus that can cause serious illnesses and a lung infection called pneumonia, the drugmaker said.

Merck’s shot, called Capvaxive, specifically protects against 21 strains of that bacteria to prevent a severe form of pneumococcal disease that can spread to other parts of the body and lead to pneumonia. It’s the first pneumococcal conjugate vaccine designed specifically for adults and aims to provide broader protection than the available shots on the market, according to the drugmaker.

Healthy adults can suffer from pneumococcal disease. But older patients and those with chronic or immunocompromising health conditions are at increased risk for the illness, especially the more serious or so-called “invasive” form. 

Invasive pneumococcal disease can lead to meningitis, an infection that causes inflammation in the area surrounding the brain and spinal cord, and an infection in the bloodstream called bacteremia. 

“If you have chronic lung disease, even asthma, you have a higher risk of getting sick with pneumococcal disease, and then being in the hospital, losing out on work,” Heather Platt, Merck’s product development team lead for the newly cleared vaccine, told CNBC in an interview. “Those are things that have a real impact on adults and children, their quality of life.”

Around 150,000 U.S. adults are hospitalized with pneumococcal pneumonia each year, Platt said. Death from the more serious form of the disease is highest among adults 50 and above, Merck said in a release in December.

Even after the FDA approval, the company’s single-dose vaccine won’t reach patients just yet. An advisory panel to the Centers for Disease Control and Prevention will meet on June 27 to discuss who should be eligible for the shot.

Platt said Merck will support the committee’s decision and is ready to supply the vaccine by late summer. 

Some analysts view Capvaxive as a key growth driver for Merck as it prepares to offset losses from its blockbuster cancer drug Keytruda, which will lose exclusivity in the U.S. in 2028. 

The market for pneumococcal conjugate vaccines is currently around $7 billion and could grow to be worth more than $10 billion over the next several years, according to a November note from Cantor Fitzgerald analysts. 

Merck’s newly approved shot could boost its competitive edge in that space, which includes drugmaker Pfizer. Merck currently markets two pneumococcal shots, but neither is specifically designed for adults. For example, the company’s existing shot Vaxneuvance is approved in the U.S. for patients 6 weeks of age and older.

Pfizer’s single-dose pneumococcal vaccine, Prevnar 20, is the current leader in the market for adults. But Merck expects its new shot to capture the majority of market share among adults, Platt said. 

“We do expect there to be rapid uptake of” Capvaxive, she said, adding that the company is confident that data on the shot will “really resonate” with clinicians and policymakers. 

Merck’s pneumococcal vaccine protects against eight strains of the bacteria that are not included in any other approved shot for the disease. Those eight strains account for roughly 30% of invasive pneumococcal disease cases in patients 65 and above, according to a release from Merck, citing CDC data from 2018 to 2021. 

The 21 strains included in Merck’s shot account for roughly 85% of invasive pneumococcal disease cases in adults 65 and above, Merck, citing the CDC data. Meanwhile, Pfizer’s Prevnar targets strains that only account for roughly 51% of cases in that age group, based on the same CDC data. 

The FDA’s approval is partly based on Merck’s late-stage trial called STRIDE-3 that pitted the vaccine against Pfizer’s Prevnar 20 in adults 18 and up who had not previously received a pneumococcal vaccine.

Correction: This story has been updated to reflect 150,000 U.S. adults are hospitalized with pneumococcal pneumonia each year.

Tesla is being accused of taking steps to keep employees in Buffalo, New York, from unionizing, according to a complaint from the National Labor Relations Board.

On Tuesday, the NLRB’s regional director for Buffalo, Linda Leslie, filed the complaint. In it, she said Tesla “promulgated and maintained,” an acceptable use policy for workplace technology in 2023 that was meant to “discourage its employees from forming, joining, or assisting the Union or engaging in other concerted activities,” after allegations were raised by members of Workers United.

CNBC obtained a copy of the complaint through a Freedom of Information Act request.

The policy restricted Tesla workers from “recording, unauthorized solicitating [sic] or promoting,” and “creating channels and distribution lists,” among other things, the complaint said.

The NLRB also claims the policy had the effect of “interfering with, restraining, and coercing employees in the exercise of rights guaranteed” under the National Labor Relations Act, which generally protects workers’ rights to discuss organizing, join a union and collectively negotiate for better pay and working conditions.

The Tesla Buffalo plant was supposed to manufacture solar panels, but has been used more recently to assemble electric vehicle charging equipment, and to house a team of AI software data labelers.

Last month, the Buffalo plant was home to a number of job cuts put in place as part of a broader restructuring at the electric vehicle company. According to a WARN notice filed in the state, Tesla is laying off 285 employees in the state of New York, mostly at the Buffalo factory. The company is eliminating thousands of jobs worldwide after declining EV sales in the first quarter.

Tesla and CEO Elon Musk have clashed with union proponents for years and were found to have engaged in union busting. In 2021, the NLRB decided that Tesla violated labor laws when it fired a union activist, and when Musk wrote on Twitter in 2018: “Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing?”

An administrative court ordered the CEO to remove the post. Tesla challenged the order but its petition for review was denied. The post in question remains on Musk’s X account, where he has 182.7 million listed followers.

Tesla has also faced workers’ rights challenges in Europe. Last year, Swedish service technicians began a strike that continues today, with the labor group allowing for some authorized work to take place at times. The employees in Sweden, where a majority of the workplace is involved in unions, are seeking a collective bargaining agreement with Tesla.

Tesla didn’t immediately respond to a request for comment.

Read the complaint here:

Wall Street’s tech IPO bankers may finally have a reason to break out the champagne after an extended drought was broken up this week with the market debuts of Reddit and Astera Labs.

While occupying very different corners of the technology market, Reddit and Astera were the first notable venture-backed tech companies to go public in the U.S. since Instacart and Klaviyo in September. Before that, there hadn’t been a significant deal since late 2021.

Morgan Stanley was the big winner among banks, having captured the coveted lead left spot on both IPOs. Goldman Sachs led last year’s only two big venture-backed offerings, meaning it had been a long dry spell for Morgan Stanley. The bank was lead left on IPOs for HashiCorp and Samsara in December 2021.

In the past two years, there have only been 15 tech IPOs total, according to research provided by University of Florida finance professor Jay Ritter. That came after a booming market in 2021, when 121 tech companies went public, the most since the dot-com bubble in 2000. Goldman Sachs and Morgan Stanley cut thousands of jobs last year in part due to the downturn in initial public offerings.

“The capital markets have been relatively quiet the past couple of years,” said Eric Juergens, a partner at law firm Debevoise and Plimpton who focuses on capital markets and private equity. Investment banks have “certainly been active in pitching clients on IPOs and other transactions and positioning themselves to be there when companies are finally ready,” he said.

Some market experts see the past week’s action as a sign of what’s to come. New York Stock Exchange President Lynn Martin told CNBC on Thursday, at the opening of Reddit trading, that a lot of companies are working toward going out in the second quarter.

That would be welcome news for Morgan Stanley. The bank collected around $37 million in total fees as the lead underwriter for the Astera and Reddit IPOs. It’s a drop in the bucket for the bank, which reported $12.9 billion in net revenue last quarter, largely from wealth management. But it could be a sign of life in the investment banking unit, which saw revenue drop by 46% over a two-year stretch from the fourth quarter of 2021 to the final three months of last year.

The 12 underwriters on Astera’s IPO this week collected $39.2 million in fees, with Morgan Stanley taking one-third of the total, or around $12.9 million. The overallotment, or greenshoe option, which allows underwriters to purchase an additional 15% of shares for clients, would add $5.9 million to the fees paid out.

Astera sells data center connectivity chips to cloud and artificial intelligence infrastructure companies. The stock soared 72% in its Nasdaq debut on Wednesday and continued rallying, gaining another 13% over the next two days, benefiting from investors’ seemingly insatiable appetite for all things AI.

Reddit’s long-awaited IPO came Wednesday night, with shares hitting the open market Thursday. Morgan Stanley made $13 million in fees in the deal and stood to make up to $5.6 million from fees on the greenshoe option.

Shares of the 19-year-old social media company popped 48% in their first day of trading on the NYSE, before dropping 8.8% on Friday.

Lise Buyer, founder of IPO consultancy Class V Group, said the market is showing signs of thawing.

“A warm reception in the market for these IPOs surely will help open the floodgates,” Buyer said. “Everyone was watching these. Investors, boards of directors and management were encouraged by them.”

She added that the bankers who have been waiting for action, “have to be delighted by this.”

Goldman Sachs, Morgan Stanley’s biggest rival, had the No. 2 position on the Reddit IPO, capturing about 19% of the fee payout. The firm scored wins last year as the lead on the Instacart and Klaviyo IPOs, which brought in combined fee revenue of around $35 million. When SoftBank took semiconductor design company Arm Holdings public last year, Barclays led the deal, with participation from Goldman Sachs, and JP Morgan.

For Investment banks, the IPO is often viewed as just the beginning of the relationship with a company. The future could bring follow-on offerings, debt raises and acquisitions, which are all specialties of the top Wall Street firms.

Morgan Stanley is finding another way to bring in additional potential business. In both the Reddit and Astera IPOs, a portion of the equity was set aside for so-called directed-share programs (DSPs), giving high-valued customers, business partners or company insiders a chance to participate.

The model was previously employed by Airbnb, Rivian and Doximity, bringing power users or early customers into their IPOs. For Morgan Stanley, the DSPs have the potential to lure new individual customers into the bank for wealth management and other services.

In Reddit’s case, the company said tens of thousands of Redditors participated in its DSP.

“The goal is just to get them in the deal,” Reddit CEO Steve Huffman told CNBC in an interview on Thursday. “Just like any professional investor.”

LONDON — Kate, Britain’s Princess of Wales, on Friday revealed she has been diagnosed with cancer and is undergoing chemotherapy.

In a video statement released Friday, she said that she had undergone major abdominal surgery in London in January, saying that it was initially thought her condition was noncancerous.

“The surgery was successful. However, tests after the operation found cancer had been present. My medical team therefore advised that I should undergo a course of preventive chemotherapy and I am now in the early stages of that treatment,” her statement said.

“This of course came as a huge shock, and William and I have been doing everything we can to process and manage this privately for the sake of our young family.”

Kensington Palace said it is confident she will make a full recovery, according to the BBC.

“I am well and getting stronger everyday by focusing on the things that will help me heal; in my mind, body and spirits,” Kate later added in her speech. She asked for space and privacy while she completed her treatment. It was not announced what type of cancer it was, or at what stage it was caught.

Buckingham Palace said King Charles III, her father-in-law, was “so proud of Catherine for her courage in speaking as she did.”

Prince Harry and Meghan Markle also released a statement, saying: “We wish health and healing for Kate and the family, and hope they are able to do so privately and in peace.”

Kate stayed in the hospital following the surgery. At the time, there was no confirmation of what the surgery was, with Kensington Palace saying Kate, 42, hoped that the public would respect “her wish that her personal medical information remains private.” The palace suggested at the time that Kate would not be resuming public duties until after Easter.

The princess had not been seen in public since Christmas Day 2023 when she was seen walking to and attending a church service alongside the wider royal family, including her children and husband Prince William, the heir to the British throne.

An online frenzy over her condition and her whereabouts dominated social media since news of her operation. The palace had largely stayed silent on the matter, which at times added fuel to the fire.

Obsession reached a peak after a picture of the former Kate Middleton was released on Mother’s Day —March 10 in the U.K. News agencies pulled the picture later that day, issuing a so-called kill notice, finding it had been edited too heavily. Every detail of the image was scrutinized, from Kate’s hair to the children’s clothes that seemed inconsistent, to a ledge in the background that appeared warped.

On March 11, Kensington Palace posted a statement from Kate on social media, saying she edited the picture. “Like many amateur photographers, I do occasionally experiment with editing. I wanted to express my apologies for any confusion the family photograph we shared yesterday caused. I hope everyone celebrating had a very happy Mother’s Day. C,” it read.

Since then, images and video of what appeared to be Kate appeared in British tabloid newspapers, further stoking conspiracies and conversation. Earlier this week, reports also emerged that a staff member at the hospital Kate was being treated at tried to access her files without permission to do so.

King Charles III announced in early February he had been diagnosed with an undisclosed form cancer and had begun treatment.

Masayoshi Son’s SoftBank made more in Arm’s after-hours trading on Wednesday than the total amount the company lost from its disastrous bet on now-bankrupt WeWork.

Arm shares rocketed as much as 41% late Wednesday after the chip designer reported revenue and earnings that sailed past analysts’ estimates. SoftBank took Arm public in September and still owns about 930 million shares, or roughly 90% of the chip designer’s outstanding stock.

Arm pared its initial gains, but SoftBank’s stake still jumped by almost $16 billion — from close to $71.6 billion to $87.4 billion — after the earnings report. Softbank acquired Arm in 2016 for $32 billion, and its shares were worth just over $47 billion at the time of the IPO last year.

The Arm windfall follows a rough stretch for SoftBank’s investment portfolio.

The company’s most high-profile wager was in WeWork, which spiraled into bankruptcy in November after the office-sharing company spent years burning through billions of dollars in cash from SoftBank at sky-high valuations. The Vision Fund, SoftBank’s venture arm, posted a $6.2 billion loss in the second quarter of 2023, tied to WeWork and other soured bets.

SoftBank told investors in November that its cumulative loss on WeWork exceeded $14 billion. In 2022, after a $32 billion loss in the Vision Fund, Son suggested that SoftBank would shift away from aggressive investments and into “defense” mode, selling down stakes in Alibaba and preparing to take Arm public. A little more than a year later, as hype over artificial intelligence mounted, Son said Softbank would switch back into “offense” mode, pursuing investments in AI.

Son can’t yet cash in on his company’s gains from Arm.

SoftBank is under a lock-up provision which prevents it from selling its Arm shares, with certain exceptions, for 180 days after the stock market debut. Arm went public in September, meaning that the lock-up restriction expires in mid-March.

WATCH: Masa Son flexes Arm

Apple shares slipped 4% on Tuesday, after Barclays downgraded the stock to underweight and slightly trimmed its price target from $161 to $160.

Barclays analyst Tim Long wrote in a note to clients Tuesday that the iPhone 15’s current “lackluster” sales, specifically in China, presaged similarly weak iPhone 16 sales — weakness that Long expects will hold true for Apple’s hardware sales broadly.

“We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounce-back in Macs, iPads and wearables,” Long wrote. Analysts and investors had noted specific weakness in China iPhone sales as far back as October.

Bloomberg has previously reported that the Chinese government has issued informal guidance forbidding state employees from using iPhones. The Chinese government has denied issuing such guidance.

Long expects that Apple’s lucrative services business will also see decelerated growth, in part due to regulatory scrutiny. Gross margin in Apple’s services businesses is roughly double the margin Apple makes on all its hardware products, and Apple CEO Tim Cook highlighted “better-than-expected” growth in that unit on an earlier investor call.

But Barclays doesn’t necessarily believe that growth is reliable in the long term.

“In 2024, we should get an initial determination on the Google TAC, and some app store investigations could intensify,” Long wrote, referring to the payments Google makes to Apple to retain its default search status.

Google CEO Sundar Pichai previously confirmed that the company pays 36% of its Safari search revenue to Apple. Regulators have been scrutinizing both Apple and Google and the default search status.

Read more at CNBC Pro.

Shares of cloud monitoring software firm Datadog soared 28% on Tuesday, their best day ever, after the company reported stronger-than-expected third-quarter earnings and full-year guidance.

The company reported quarterly revenue of $547.5 million, up 25% year over year, topping estimates. That growth rate was consistent with results in the second quarter. Analysts surveyed by LSEG, formerly known as Refinitiv, had expected revenue of $524.1 million. Adjusted earnings per share came out to 45 cents, better than the 34 cents analysts expected.

Datadog also bumped up its revenue and profit view for the full year. The company now expects fourth-quarter revenue between $564 million and $568 million, alongside full-year revenue of around $2.1 billion. The figures exceeded consensus of $543.3 million and $2.06 billion, respectively, according to a survey of analysts by LSEG.

Co-founder and CEO Olivier Pomel told analysts on a conference call that “AI-native customers” contributed 2.5% of Datadog’s annualized revenue during the quarter. Pomel declined to confirm if his company was working with OpenAI, Anthropic or Cohere. All three sell access to large language models that can compose text based on a few words of human input.

Datadog’s surge buoyed other cloud-computing names, including MongoDB and Snowflake.

The latest guidance is the cheeriest Datadog has been all year. Its stock fell sharply in August after lowering guidance as companies reduced cloud spending.

Datadog builds cloud monitoring and security products that work with Amazon Web Services, Google Cloud and Microsoft Azure. The company was founded in 2010 and debuted on the Nasdaq in 2019.

The cloud infrastructure providers indicated in late October that some organizations’ cost-reduction efforts have begun to wane. Similar to many cloud names, Datadog was not immune to corporate belt-tightening. Pomel validated that observation, saying optimization activity among Datadog clients could be easing up. “Overall, we continue to see impact from optimization in our business, but we believe that the intensity and breadth of optimization we’ve experienced in recent quarters is moderating,” he said Tuesday.

The fourth quarter is off to a good start, although usage does tend to fall around the holidays, Pomel said.

“Into the print there was a lot of anxiety about whether Datadog would follow AWS to improving QoQ growth and stable YoY, or demonstrate a worried disconnect and continue to decelerate on a YoY basis,” Bernstein Research analysts led by Peter Weed wrote in a Tuesday note. “Datadog emphatically dispelled these worries.” The analysts have the equivalent of a buy rating on the stock.

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Heather Le Biller shed 9 pounds within the first week of taking Novo Nordisk‘s blockbuster diabetes drug Ozempic – and then even more as she continued treatment. 

Le Biller, a flight attendant who lives in France, noticed her appetite quiet down while taking the weekly injection. But so did her cravings for wine, a drink she called “almost customary to pair with every dinner” in France. 

“When I was on Ozempic, it made me not want that as much anymore,” Le Biller told CNBC. “I could have a few sips of wine and just be satisfied and move on. I didn’t need multiple glasses a night, so it definitely seems to help with that.” 

Le Biller is among several patients who took diabetes and weight loss drugs and also noticed an effect on their cravings for alcohol, nicotine, opioids or even some compulsive behaviors, such as online shopping and gambling.

Those drugs – including Ozempic and its weight loss counterpart from Novo Nordisk, Wegovy – are called GLP-1 agonists, which mimic a hormone produced in the gut to suppress a person’s appetite. 

These anecdotal reports add to the growing list of potential benefits of GLP-1s beyond shedding unwanted pounds. Dramatic weight loss is the primary reason why those drugs have skyrocketed in popularity in the U.S., despite the fact that they can cost around $1,000 a month and some health insurers have stopped covering them altogether. 

“We’re prescribing these drugs and seeing this effect as a secondary benefit in patients. One of my patients even said they’re not doing as much online shopping, which is helping their wallet,” said Dr. Angela Fitch, an obesity medicine physician and president of the Obesity Medicine Association. That group is the largest organization of physicians, nurse practitioners and other health-care providers dedicated to treating obesity. 

This striking effect of GLP-1s isn’t a new idea. Several studies have demonstrated that certain GLP-1s curb alcohol intake in rodents and monkeys. 

More research needs to be done, particularly on humans, to prove that the drugs have that effect. That means it could take years before the Food and Drug Administration and other regulators worldwide approve drugs like Ozempic and Wegovy as addiction treatments. 

Novo Nordisk told CNBC in a statement that they aren’t pursuing that research.

“Pharma has this general lack of interest in investing in the addiction field” due to a perfect storm of factors, including the high stigma around addiction disorders among doctors, physicians and even patients, according to Dr. Lorenzo Leggio, clinical director of the National Institute on Drug Abuse, or NIDA.

Leggio and other scientists are working to fill the gap – and have already made strides toward confirming the potential of GLP-1s as addiction treatments.

Scientists have published nearly a dozen studies showing how GLP-1s stop binge drinking in rats and mice, reduce their desire for alcohol, prevent relapse in addicted animals and decrease alcohol consumption overall. 

Earlier studies have examined older, less potent GLP-1s such as exenatide, a drug approved for diabetes under the names Byetta and Bydureon. 

But more recent studies on semaglutide – the generic name for Ozempic and Wegovy – and another drug from Eli Lilly called dulaglutide “are the most promising” because they reduced alcohol intake in animals by 60% to 80%, according to pharmacologist Elisabet Jerlhag. 

Studies have also shown that rats that stop taking dulaglutide, which is approved for diabetes under the name Trulicity, “take weeks before they start drinking again,” she said.

Jerlhag and her colleagues at the University of Gothenburg in Sweden have studied the effect of GLP-1s on addictive behaviors for more than a decade. 

Other studies on animals have also found that GLP-1 drugs reduce the consumption of nicotine, cocaine, heroin and amphetamines. 

Few studies have been done on humans, but six clinical trials are now underway investigating how semaglutide may alter people’s drinking and smoking habits. 

The reason behind this anti-addiction effect of GLP-1s is that those drugs also affect the brain, not just the gut, according to NIDA’s Leggio. 

“The mechanism in the brain that regulates overeating is important in regulating addictive behaviors as well,” Leggio told CNBC. “There is a clear shared overlap. So it’s possible that the medications may help people with addiction by acting on that specific mechanism.”

GLP-1s specifically decrease the amount of dopamine the brain releases after people indulge in behaviors like drinking, smoking or even eating a sweet dessert, according to Dr. Steven Batash, a gastroenterologist who provides nonsurgical weight loss procedures in Queens, New York. 

Batash said dopamine is a neurotransmitter that “reinforces the pleasure” of doing those activities. When GLP-1s take away that pleasure, they also eliminate the motivation to do those activities. 

Still, NIDA’s Leggio advises against using GLP-1s off-label to reduce addictive behaviors, “simply because there’s not enough evidence in humans that they work.” 

“The animal studies are very promising and what people are reporting is very, very important, but as a scientist, I will also tell you that that’s not enough,” he told CNBC. 

Leggio said scientists need to conduct more double-blind, randomized, placebo-controlled studies on humans – or trials where both participants and researchers don’t know who is getting randomly selected to receive a placebo or an actual drug. Those types of studies are “the gold standard” for proving whether a treatment achieves a certain effect or not, he added

But even if those trials confirm that GLP-1s can reduce addictive behaviors in humans, “it will most likely work for some patients and not others,” according to Leggio. 

“We already know, as a matter of fact, that these medications and any drug overall do not work for everybody,” he said. 

For example, the only clinical study in this area investigated whether exenatide could treat alcohol use disorder in people, as compared with cognitive behavioral therapy.

But a subgroup analysis of that 2022 study found that exenatide reduced drinking in a subgroup of participants who had obesity, while the drug actually increased drinking in people who didn’t. 

The reason may be that “leaner patients” treated with exenatide experienced a larger decrease in blood sugar, which might be associated with increased cravings for alcohol, the researchers wrote in the study.

But even that hypothesis needs to be confirmed with further research. 

It’s also unclear how long the anti-addiction effect of GLP-1s will last. That’s already one complaint patients have when it comes to weight loss: People who lose weight after taking Ozempic or Wegovy tend to gain most of it – or even more – back within a few years. 

“It’s possible that some people will relapse and go back to heavy drinking if they stopped taking the medication,” Leggio said. He added that some patients will need constant treatment because addiction is a chronic disease. 

However, Leggio said there’s “nothing wrong” with a patient seeking GLP-1s to treat diabetes or obesity, in addition to an addiction disorder. 

“If you want to see whether Ozempic will help you better control the sugar in your blood but also help you with your drinking, that’s wonderful. Killing two birds with one stone,” Leggio said. “But if the only reason you want to take the drug is because of your alcohol or smoking, then you should wait for more evidence.” 

It may take years, but scientists and other health experts hope that a new class of treatments for alcohol use disorder, smoking and other addictive behaviors is on the horizon. 

“It may be that three, four or five years from now, you and I are going to say that GLP-1 agonists are wonderful for treating mild diabetes, wonderful for weight loss, and perhaps we will also say that they are wonderful for curbing addictive behaviors,” Batash told CNBC.

But even if GLP-1s get approved to treat addiction, it’s unclear how many people would take them. Uptake of existing medications for addiction is already low.

About 14 million American adults had alcohol use disorder – a disease associated with uncontrolled drinking – in the past year as of 2019. But only 1.6% used any of the three FDA-approved drugs for the condition. 

Johnson & Johnson On Monday, it said it plans to reduce its stake by at least 80% in Kenvue, the consumer health company it founded as an independent company earlier this year, via a stock exchange offering.

J&J owns 89.6% of the common shares of Kenvue, which amounts to more than 1.72 billion shares.

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The exchange offer, also known as a split, will allow J&J shareholders to swap all or a portion of their shares for Kenvue common stock at a 7% discount. It is expected to be tax deductible, J&J said in a statement.

The company indicated that the split is voluntary for investors and is scheduled to close on the third of August. 18, which is much earlier than expected.

J&J said it received a waiver denying the stock lock period associated with Kenvue’s initial public offering in May. This lockout agreement required J&J to wait 180 days to sell any of its stock.

“We believe now is the right time to distribute Kenvue shares, and we are confident that the split is the appropriate path forward to create value for our shareholders,” J&J CEO Joaquín Duato said in a statement.

Duato added that the split will increase J&J’s focus on its pharmaceutical and medical technology businesses — both of which helped the company beat second-quarter revenue and adjusted earnings last week.

J&J first announced its intention to launch a swap offering in its second-quarter earnings report Thursday, but the company provided few details on the plan. Kenvue shares tumbled after that announcement, despite second-quarter results that also beat Wall Street estimates.

When asked about J&J’s planned swap offering Thursday, Kenvue CEO Thibaut Mongon told CNBC’s “Squawk on the Street” that the company is “pleased with the way shareholders have been received for the IPO.”

“We see a great deal of alignment among our new investors in seeing Kenvue’s potential, but I can tell you we’re absolutely ready to leave as a completely independent company,” he said.