Opinion: A Texas-based merger where everybody wins

Last November, Kimberly-Clark - maker of household brands like Cottonelle, Kleenex, and Huggies - announced that it would acquire consumer health company Kenvue in a $48.7 billion deal. Headquartered in Irving, Texas, Kimberly-Clark’s expansion is a massive economic win for the state as it offers potential job growth and a chance for a Texas company to become a global leader in consumer health manufacturing. Consumers are bound to get both lower prices and more choice in their day-to-day shopping. 

The conventional wisdom about mergers is that they streamline processes and improve efficiency, ultimately leading to lower prices for consumers. The market for sanitary products and medical instruments is what any analyst would call tight, but it fits into the model of an industry ripe for consolidation. Studies of U.S. retail mergers between 2006 and 2017 involving producers of grocery items found price drops of 2.3% or more in a large slice of mergers where logistical duplication is eliminated. 

After the announcement, Washington and Wall Street labeled the deal a decisive victory for consumers and American manufacturing. Jim Cramer took to X writing, “I LOVE this KMB to buy Kenvue deal…. you create a real rival to PG [Procter & Gamble] with tremendous cost take outs coming!!! All over it.” 

If you’re wondering how a corporate merger expands consumer choice, the answer is simple: by virtue of being a complementary merger. 

Kimberly-Clark and Kenvue sell highly different products. Some of Kenvue’s key brands include Tylenol, Listerine, and Band-Aid, often found just a few aisles away from Kimberly-Clark’s staple brands. By combining their expertise and compatible supply networks, the two entities can lower costs, deliver essential products to consumers more efficiently, and boost supply chain resilience.

The importance of the supply chain resilience created by the merger can’t be understated. At any given moment, often at the whims of President Trump, international supply chains can be upended with the announcement of new tariffs. And upend them he often does. 

This constant see-saw of shifting tariff policy not only creates uncertainty for manufacturers but also increases prices for Americans. A merged company is simply more resilient to these wild fluctuations and extends benefits to consumers by ensuring brand continuity. Combined resources also mean a company is better able to challenge major players in the space, as Jim Cramer mentioned. 

But the benefits are local as well. Even though Texas doesn’t have a corporate income tax, the merger could pay dividends for Texas. Expanded operations tend to generate key growth in franchise, property, and sales tax revenue. Increased employment can fuel local spending on housing and small businesses, injecting new capital into local communities. 

Overall, it’s a state, national, and global win. Bigger is sometimes better. 

Some analysts have raised questions about potential litigation risk following unfounded claims that acetaminophen causes autism when taken during pregnancy. Tylenol, Kenvue’s leading acetaminophen product, became the focus of media and political attention after Health Secretary Robert F. Kennedy, Jr. made the comments without evidence.

But the backlash to Kennedy was swift and widespread. Medical experts, regulators, and even consumer advocates dismissed the claims as baseless, leading to Kennedy walking it back days later. 

Consumer choice should not be needlessly limited by politics or pseudoscience. The Kimberly-Clark and Kenvue merger should be allowed to proceed without such undue influence, as Americans — especially Texans — will stand to benefit. Thankfully, despite keeping the Biden administration’s merger guidelines intact, Trump’s enforcement team at the FTC and DOJ is taking a more targeted and less ideological approach. Gone are the days of FTC meddling in handbag company acquisitions purely as a means to make a point. 

Large companies are signaling confidence in the enduring strength of American manufacturing and the communities that support it when they pursue mergers of this sort. Kimberly-Clark and Kenvue will be a good match, and everybody wins. 

David Clement is the North American Affairs Manager at the Consumer Choice Center