Good morning, everyone. Welcome back to day two of Morgan Stanley's Global Consumer and Retail Conference. I'm Dara Mohsenian, Morgan Stanley's household products and beverage analyst. Just before we get started, a quick disclosure: please see the Morgan Stanley Research website at www.morganstanley.com for important research disclosures and contact your Morgan Stanley representative if you have any questions. And with that, I'm very pleased to welcome Kimberly-Clark back to our conference. They're coming off a transformational acquisition announcement of Kenvue, so it's a great time to have you guys here as you take another step in your transformation in recent years. With us today on stage are Chairman and CEO Mike Hsu, and CFO Nelson Urdaneta, and Head of Investor Relations Chris Jakubik. Thank you, guys, for being here today.
All right. Great to be here today.
Thank you.
So, Mike, I thought first we could start off big picture around the Kenvue deal. It's obviously very topical right now. You've built real momentum at Kimberly-Clark over the last couple of years. Power and care is working. Productivity has picked up. You've accelerated organic sales growth, market share performance. Help us understand why now was the right time for Kimberly to take on something as large and complex as Kenvue versus continuing to pursue that lower-risk strategy of executing on the base business, which seems to be working, so it creates a higher bar.
Yeah. Great question. We feel great about our base business, and we can talk more about that later, and the momentum that we've been building on our core business trajectory. But what we're really focused on and excited about is building the preeminent personal wellness leader, right? And that's where we feel like we have a great opportunity in joining forces with Kenvue. And really what we're trying to do is we see the opportunity to deliver extraordinary everyday care as a combined entity. I would say, and as you point out, Dara, that our performance has been improving significantly over the last 10 years. We've built an operating model and, I would say, an accountable culture that has been leading for the last, I would say, two years, industry-leading results, right? And that's really driven by, I think, a thing that maybe you put in that note last quarter.
We've really focused on having superior value propositions at every rung of the good, better, best ladder, including the good tier. Even though our strategy long-term has been to premiumize our categories, we made a shift and we're emphasizing the value tiers the last couple of years, and that's having great effect. Secondly, we have really worked hard to improve our supply chain. We are putting up world-class or industry-leading productivity last year, this year as well. And then we've got an operating model that we think is different than a lot of companies, and we see it as we're trying to be lean, fast, and agile. And so those are kind of the things that we bring. And then with Kenvue, though, we see kind of the crown jewel of health and wellness, right?
A crown jewel portfolio with iconic brand portfolios, leading market positions, and then I think really preeminent science, medical, regulatory knowledge that really can catapult us in this space, and so together, we think, well, we haven't done one of this magnitude since Scott Tissue days and my predecessor, Tom Falk, but the three of us, Nelson, Chris, and I, we were all at Kraft, and what we observed at Kraft that worked well for us there was we call internally the plug-and-play approach, right? You saw over time things come in and out of Kraft or even the split between Kraft and Mondelez. The backbone of that was a really good management system that people could plug into or you could plug businesses in like Cadbury and then unplug from.
We've worked really hard over the last couple of years to build a better plug-and-play system with our management systems, and we think we have a very effective and efficient operating model and an efficient set of management systems to help do this.
Great. That's helpful. You ran through the attributes of Kimberly-Clark as well as the Kenvue side and their iconic brands. What do you bring to each other in terms of incremental value?
Yeah. Well, I think the biggest thing is our focus strategically has been to shift our mix to, as you probably observed, higher margin, higher growth categories. We really wanted to shift our mix. When you think about that, we took an exhaustive look at all categories. This goes all the way back to 2017 when I became the Chief Operating Officer. We've constantly looked at all consumer categories in our space and then further out. Health and wellness always came to the top of the list. The biggest reason, Dara, you're probably fully aware, we have exposure to an aging population through our adult care business, Poise and Depend. We see the trends not just in the U.S., which it's been growing near double digits the whole time I've been at KC. That's because of the aging population in the U.S.
But that population is not just aging in the U.S. It's all developed markets and then increasingly developing and emerging markets as well. And so as that population continues to age, and I'm still fortunate enough, I have four parents still with us. They're all in their 90s. But as the population ages, the need for health and wellness products becomes more and more acute. And so as Kirk and I, the Kenvue CEO, Kirk Perry, and I got together, we did feel like, "Oh, there's going to be a unique opportunity to tap into that." And the combination of our portfolios, there were a couple of unique things. One is, and Kirk recognized this from his Procter days because he competed in all of our categories for most of his tenure there.
But what we would say is we tend to be daily use, long duration, high frequency, high ring. And so because of that, consumers want a long-term relationship with our brands. And so we've invested a lot, Dara, in building digital social capability to have a continuous relationship with our consumers. We don't do the old-fashioned marketing acquisition anymore. We bring them in and they stay with us. I think a lot of other brands haven't done that, and it's been a little more difficult for some of the Kenvue brands to do that because the spend is not as great, right? If you're buying Band-Aids, you're probably not spending $1,000 a year like you're spending on Huggies.
And so we build those relationships and we're able to bring other brands along like we're doing in some markets, let's say in the baby care life stage or in the women's life stage or in the senior care life stage. And so what we recognized is we serve the exact same life stages. We come at them from different ends. They're pills and lotions and medicine, and then we come at it with absorbing most of your bodily fluids, right? So it's a different angle, but we're really going after the same consumer. And so we felt like, "Gosh, if we put their science and our engineering together, we can come up with some really great solves for the consumer.
Right. And as you've gone through more due diligence work, anything that's emerged that has excited you or maybe wasn't something that was on your radar screen as much originally?
Maybe you may want to jump in, Nelson, but probably the biggest thing was the word geographic complementarity or the portfolio complementarity. I don't use six-syllable words very often. I can barely say it.
Dangerous.
Right. But the degree of the complementarity of our portfolios is extremely high. I mean, and the obvious one is on the geographic side. And from a revenue perspective, it was funny. One of the directors said, "Well, I don't really usually put much stock in the revenue synergies," right? But this is one where it's pretty clear. You might say, "Hey, revenue synergies tend to be a little ephemeral." But our experience, and Nelson was in the Asia-Pacific chair when Kraft bought Cadbury. And in Asia, we had struggled with Oreo distribution in India and in China. But when the Cadbury came into the system and Lou came into the system, which had great distribution, and you may want to talk about it, Chris, in China, those brands went from low, low, low double-digit millions of revenue to triple digits, pretty solid triple digits pretty quickly.
And so for us, maybe the one that was shocking to us was in our largest markets, there was a high degree of complementarity. So, for example, on the Kenvue side, Europe ends up being a pretty big market for them. After our spin of our international family professional business, we'll almost have no business in Europe. And not only are they strong in Europe, but they're also multi-billion dollar business in Europe, but also really strong in the pharma channel, really strong in the medical channel, which is areas that we didn't have access as much to. So that's one. Second, for them, India. We used to be in a joint venture with Unilever. We struggled on physical distribution since then. We're doing fine online, but Kenvue is in 3.1 million out of 5 million points of distribution in India.
That one's going to be an exciting opportunity that we all got excited about. If you flip it around, where are we really big? KC in Mexico is a $3 billion business. There are a couple hundred million in Mexico. We've got all these markets where Korea for us is a very large business, smaller for them. China, we've been, as you know, doing very, very well, and they've been struggling a little bit in China. It just felt like there's a lot of vast opportunities to work really aggressively on driving distribution of the portfolio brands, complementary portfolio brands to build both businesses.
Great. That's helpful. And Nelson, maybe we can turn to cost synergies from revenue synergies. The target as a percent of Kenvue's revenue sits at the high end of what we've typically seen in CPG transactions. Why should investors feel confident around that level of delivery, especially given the limited overlap between the two businesses? What really gives you confidence there and what's sort of behind those numbers?
Sure. So a few things. We built our acquisition model on a set of conservative assumptions that were thoroughly validated through the due diligence process. The nature of the integration, as Mike was explaining, the plug-and-play, as well as the high visibility to the synergies, give us high confidence to be able to deliver the $1.9 billion of cost synergies throughout the three years following the close of the transaction. If we look closely at the portfolio, there are a lot of commonalities, actually, between the two companies, as Mike was stating. First is the geographic bit. Just to highlight, we largely operate in the same markets. And actually, in 80% of the markets, we're bigger. Secondly, we are serving a very similar amount of customers, both brick and mortar and online. So there's a lot of synergies to be had on that end.
And then thirdly, there's a lot of benefits to be realized by joining our supply chains. If we look at the process that we followed to come up with the synergies, a few things. One, we spend the time together with the team at Kenvue to validate all the synergies, both from a country-by-country basis as well as functions. We triangulated with external sources, and then we did this bottoms-up validation as part of the due diligence. The other bit is we took a top-down approach, and we looked at, as you said, CPG benchmarks, which run in the 8%-9% range. But if you look at consumer health, average deals have been more on the 13% level with a few deals actually higher than that.
If we look at the landing of our assumption, which is about 12% of net sales at Kenvue, that's spot-on where we'd expect to land. The other bit to take into account is we've set aside in our modeling about $2.5 billion of costs to deliver the $1.9 billion of cost synergies. That's about a 1.3 times ratio, which lands pretty much where benchmarks are at.
Great. That's helpful. Maybe can you take us under the hood a bit more in terms of those cost synergies? What are really the key buckets? What are the key areas you're going after functionally?
So let me peel the onion a bit. So it's going to be three buckets that will help us deliver. And actually, our expectation is to be ahead of the cost synergies that we've been communicating. And we are confident that we'd be able to deliver about 80% of those synergies within the first two years after the merge. These buckets are as follows. One, it's G&A overheads, which will drive about 40% of the savings. And as you think about the drivers of the G&A overhead savings, three things to take into consideration. One is merging, synergizing corporate as well as some of the centralized functions. The second bucket that we would be driving is going to be within G&A, the fact that we're going to be driving joint efforts around real Estate, office space, etc., and that's going to be in that space.
The third bucket is around non-people-related costs. Think of systems, HR, finance. All of that will be one. The second bucket that drives these synergies will be procurement and supply chain and distribution. As you look at distribution and network design for the product that we distribute, take into account that, one, we have developed very strong digital tools that have been driving significant savings in our procurement organization. Secondly, as you think about distributing products together, Kenvue's products tend to weigh out pretty quickly on a truck. Ours tend to cube out pretty quickly. By optimizing mix, that's going to drive benefits. The other bit is that within supply chain, we've been driving over the last two years best-in-class productivity, as Mike mentioned. We've been delivering about 6% gross productivity in 2024 and 2025.
And as we bring to bear these capabilities, that will support this delivery. And then the last bucket of savings for the synergies is in sales and marketing, which will drive about 30% of those savings. And in their examples, you have one, trade spend optimization. We've been doing a lot of revenue growth management buildups and capabilities in the last few years. We'll bring those capabilities to bear. Secondly, when you look at non-working media spend, our ratio is about 20%. Kenvue's is 40%. So there's room for us to do savings there. Thirdly, eliminating duplicate customer teams by bringing best of both in both sales and marketing. So as you look at that, those savings would be there. And then the last bit that I'd leave you with is we expect those savings to flow to the bottom line.
Because as we did the modeling, the base plan for Kenvue, excluding synergies, we brought it down by around 200 basis points, the EBITDA margin for 2027, versus what you would have seen in consensus right up to the moment that we announced the transaction. Because we are planning on the base plan for Kenvue to step up investments in both R&D and marketing.
Okay. Great. You mentioned you're not necessarily stopping at your targets, right? You're looking to generate upside. Where do you see the potential areas of upside from a cost synergy standpoint? Is it mainly within the buckets you mentioned, or are there certain areas you're not putting into your original synergies? Just thinking about where there could be upside potential.
Yeah. Can I just interject with just the one thing I'll add leading up into that, Dara, it applies across G&A and the cost of goods set of costs, which is the paradigm that we tend to operate in lower gross margin categories, right? And so because of that, we've held our organization standard to be the most efficient, right? And so we're proud of the fact that we operate on a very lean basis. Our G&A levels tend to be mandated internally by us, I guess, to be top quartile, right? And that's a very different perspective than what we learned in our discussions with Kenvue management on. They tend to be higher on that G&A norm. Some of it is because coming out of that spin, maybe their systems and staffing weren't as fully developed.
But I think therein lies, I think, where some of that upside opportunity is going to come from because, again, you're marrying up a lean organization with one that is a little less lean, and we're going to find a way to get lean.
Yeah, and just for reference, I think to kind of understand the order of magnitude on the G&A side, if you look at SG&A and you take out R&D and the marketing pieces, we tend to be in the 11.5%-12% of revenue range, and I think they're closer to about 17% right now, so there's a lot of space in there.
Right.
It's in those buckets. I mean, at the end of the day, it's in those buckets. The benchmarks clearly point to the opportunity. We, as Mike said, we've been doing that for many years. We have lean structures that are able to operate very effectively. That's why we feel that there's upside, actually, to the savings that we've laid out.
On the revenue piece as well, when you look at the revenue synergies that we've laid out, the complementarity, it's just geographic complementarity makes up the vast, vast majority of the revenue synergies that we've laid out. But as we look longer term in terms of bringing the R&D together and what you can do in terms of adjacencies and leveraging the know-how of each side, our expertise in materials, their expertise in more of the molecules, if you will, that really hasn't been built into the revenue synergy piece.
Great. Mike, you mentioned the great brands on the Kenvue side. They've been more of a tough time since the separation. What's your plan to revitalize the brands, and what gives you confidence in your ability to do so?
Confidence in the ability? Well, it's because I've been in the exact same shoes, probably worse. You were covering us in 2017, weren't you? Do you remember those days?
Yes. Yes.
Do you remember how bad that was for me?
Yes.
That was my first year as Chief Operating Officer. I think at the half, I think our business revenue in North America was down 7% that year. There was a diaper war happening and also others, you may recall. But beyond that, I would say tough performance and worse than what Kenvue's performance is now. I think I said on our post-announcement call, I had 23 reporting units, P&L units reporting in at the time. This is my second quarter as COO. 22 of them were declining, right? And so I've kind of been exactly in these shoes. What was the core problem? I mean, one, there was a competitive issue, but that wasn't the biggest thing. I think the competitive issue knocks you off your plan, your game a little bit. And then what happens is the organization was kind of conditioned to deliver OP or EPS.
The company was very focused on EPS growth. And so when you are operating that mode, some of the growth muscle goes away over time. And we've been operating in that mode for quite a long time. I think in our discussions with Kenvue, I would say the symptoms are the same, right? Which is, and you've covered them for a long time, I think. Internally, maybe there was more of a cash focus while they were under the corporate banner of the preceding company. But coming out of the spin, I think a pretty strong focus on the plan, EPS growth, and all those things. And so I would say some of that growth muscle had eroded. And so what became clear in our discussions that we had with the Kenvue management team is we have developed the approach.
I mean, coming out of 2017, we said, "Hey, we got to find a way to grow the business profitably. And at the same time, we're going to build world-class consumer capability to kind of manage the business more effectively longer term." And so what we talked about with the Kenvue team is I'd say we have a ready-made approach to get companies on a virtuous cycle and get off of that vicious cycle, right? And so it becomes, well, what are those things? One, it starts, and this is probably the most important one, getting the organization into a growth and accountability mindset, right? That they have to have clarity on who owns the number, what they're accountable for, and you got to be able to count on them to deliver. And that's harder than it looks, but it's like the prerequisite for everything.
You can't do anything until you get that. Second big thing that we talked a lot about is maybe taking the time to have the skill and the will to invest for impact. I mean, because people plop in investment on things, and then you'll kind of wonder where it went. I think what we did, even in those darkest days of 2017, we made some big technology investments. We identified where the growth drivers in our personal care business were going to be, where the big demand spaces that consumers would feel like would be worth paying more for over time. The reason we're winning right now the last couple of years is because of this Gen 3 Diaper that we've been talking about that we invested in initially back in 2017. That's when we laid the bet.
And so it's like you have to have the conviction, you have to have the insight, you have to then set the money aside and let the teams work. And so I'd say we've developed that skill and will not just in technology, but also in the marketing front, the sales execution front, the investments we made to build a great world-class productivity pipeline. So I think that's the second big thing. And then the last one is maybe the hardest one, but it's mostly his job and mine, which is then we have to set the right investor expectations and be willing to take a punch and maybe make you guys not so happy with us so that we can continue to invest and create that virtuous cycle.
Great. That's helpful. Maybe I can tie that back to revenue synergies a bit. Just, I think one of the lessons we've learned historically, you go back decades in CPG, we all do on stage, is sometimes when you bring two entities together, there's incremental opportunities, but sometimes you get base business distraction. So how do you guard against that on the Kimberly-Clark side and the momentum you've created behind innovation and the other areas that you mentioned?
Yeah. Well, we're really excited about our plan. And I've been saying publicly, gosh, our innovation, the next 10 years is going to be way better than the last 10 years. And next year is going to be better than this year. And so we feel very good about our pipeline across the board. Now, that's pipeline of innovation, our pipeline of marketing ideas, our pipeline of productivity ideas. And so I think for the KC side, all we're asking our organization to do is just keep running that play, right? And yeah, one of the key things, and we started just this week on our initial integration management office meetings with the Kenvue team, our team and the Kenvue team. And one of the things we said is, "Hey, they have a strong plan that they're excited about. We have a strong plan.
We got to keep our teams from being distracted," right? But then the next sets of things is I think we have to be very surgical about realizing the cost synergies, which is a fact of life for what we're trying to do. But we also want to get a great start on the revenue synergies. And we think, again, as I said, in the near term, there's some obvious brand distribution opportunities in markets like Mexico for the Kenvue brands, Korea for the Kenvue brands, India for us in leveraging the Kenvue capability. And so we want to really get behind those and prime the pump on those. Obviously, there's no gun jumping, so we won't be doing anything before the close, but we can plan for that.
Right. Okay. And then on Tylenol, there's clearly been some external noise around the brand, and that's impacted consumer sentiment to some extent. You've got the talc exposure in Europe. So just level of confidence around those risk points as you do due diligence here and what gives you confidence that those risk points are manageable?
Yeah. So I've got a fairly experienced and seasoned board, you might expect. So Sheri McCoy is our lead director. She grew up in R&D at J&J Consumer, and then she was the vice chair at J&J Consumer. We have Deeptha Khanna, who ran the global baby business at J&J. I've got Joe Romanelli, who's at Merck in the pharma business, so he understands that side as well. And then Sylvia Burwell, who was the former Secretary of HHS. So I'd say given those players, they know the company to some extent and also know kind of the medical science world. Their expectations for due diligence were pretty high. And so we retained what we would say are the foremost experts from a legal perspective, medical, regulatory perspective.
We brought in Ted Boutrous from Gibson Dunn, who's typically considered one of the top litigators on these types of cases in the U.S., Arnold & Porter, who has a lot of regulatory experience, especially with the FDA, and brought that to bear. We had Hilary Marston, who was the former chief medical officer of the FDA, advising us, and so that team kind of put together, took apart, I would say, everything starting with the science, and I would say we felt convicted in staying with Kenvue that the science is clear, and we believe it's safe and the safest alternative, which I think the FDA has actually said in the last couple of weeks, that remains the safest alternative for pregnant moms to use, and they also, I think, said that there has not been a causal link established between autism and the use of acetaminophen.
So we went clinically through the scientific research on a case-by-case basis. And I would say Dr. Marston was pretty clear in terms of her opinion on that side. And then similarly, we went case-by-case on all the plaintiff's cases that you could say are precedent-type cases. And so the only thing, well, I won't give you a number as to what we used in our calculations. Hopefully, the investors would understand. I would pick it up in the same ways that you might, which is in my head, I'm calculating expected value, right? And so what I would tell you is that there's no scenario that we came across where the liability would be greater than the value creation of the synergies.
Right. Great. That's helpful. So looking at the Kenvue portfolio, there is an underperforming tail piece of the portfolio. Obviously, there's some very large brands with great brand equity, but there's also a tail. Just as you think about the combined businesses and look out five to 10 years, is there further opportunity in your mind to sort of prune or reshape the portfolio, whether it's tail brands or potentially sort of unlocking value when you look at the Kenvue brand portfolio? How do you think about that holistically?
Yeah. Oh,
I can take that.
Yeah.
So a few things there. I mean, we remain very disciplined and focused on driving and creating long-term shareholder value. I think we've clearly demonstrated that over the last few years, Dara. So if you look at the moves we've made in our portfolio, starting with in 2023, we sold our Brazilian tissue and professional business. Last year, we sold our personal protective equipment business. We've exited about $650 million ongoing private label business. So our exposure for the remaining portfolio and private label is going to be de minimis going forward. We recently announced the creation of the joint venture with Suzano, which we expect to go into place right around midpoint of next year, which will leave us with a company that has exposure to higher growth and higher margin categories. So we've been very disciplined.
As you look at Kenvue, first, I want to be clear. We like the categories they're in. We like the brands that they have. Having said that, there's always opportunities to optimize the portfolio in order to be driving better shareholder value. The team at Kenvue, as you point out, the leadership team is already executing a strategy in that regard, and what our conviction is, as long as it's driven by driving and ensuring that long-term shareholder value is protected and created, that's the approach that should be taken, so no different to the playbook we have today.
We spent a lot of time on Kenvue. So maybe let's get to the base business. First, just look, the consumer environment's difficult. We've heard that from CPG companies at this conference pretty consistently over the last couple of days. Just give us a little bit of update on what you're seeing from a consumer sentiment standpoint. You're obviously in pretty defensive categories, but also from a promotional standpoint as you look at the reaction from some of your peers that compete across HPC in the U.S. and if there are any international markets you would point out.
Yeah. I'll start with one that we still see a long runway of growth by elevating and expanding our categories over time. And I will stipulate, hey, the current environment, especially here in the U.S. or North America, is tougher than it has been in the past. But our categories, we still see a long runway of growth. And I'll tell you a couple of reasons why. One, we did see the impact on the American consumer, especially on households' incomes of 100,000 and below, are going to be tougher. And you could do the research and see where inflation's impacted the market basket of goods, where, hey, the stimulus payments ran out and savings rates have actually dipped below where they were pre-COVID. So all those things have happened. We saw that come in maybe two years ago.
What we did, Darr, and this goes back to the note that you published last quarter, is we pivoted our strategy, even though our long-term strategy is to premiumize our category. We've made tremendous progress. I think in North America, we went from it being a 40% premium business to 70% premium business over 10 years. That's the core strategy. But that said, we want to lead. What we said is we have to have a superior value proposition at every rung of the good, better, best ladder. That includes the good tier. For us, like in U.S. Huggies, that would be our Snug & Dry tier or our value tier brand. What we've done, and you know we've made a lot of progress rolling out our Gen 3 Diaper. It's behind what drove us to market leadership in China.
It's taken our, I think we've grown our share in Korea and Australia separately by 15 points each. We're now in the 60s on share in those markets. And so every market that we take that Gen 3 Diaper into, our share really, really improves. And so we brought that into the U.S. on snug and dry first this year, our tier four or our value tier product. And so I think that's what's really behind our strong vol-mix performance this year. It's mostly strong volumes because we've cascaded our best technologies into our value tiers. And so we're really proud of that. That not with standing, the promotion environment has ticked up. I know Nelson's going to want to comment on it, but I will tell you that promotion is not a growth driver for us.
We see promotion purely as a trial driver on the innovation that we want to get in the consumer's hands. And the reason we do it that way, our philosophy is that is you know our categories there. They go with a biological cycle. And so promoting them isn't going to make anybody use the products more, right? And so that's our focus is on driving innovation to grow the category, not by promoting our way there. But you may.
Yeah. Let me just add a little color to kind of the environment that we're facing today. And I'll start with for the last seven quarters, talk about two years, we have been growing volume and mix because we're meeting consumers where they need us. We sensed and we saw the pressure on consumer purchasing power a couple of years ago.
And we pivoted, as Mike said, and we don't see today a catalyst in the short term. As it turns and looking at the categories, the categories in the last few weeks have been softer than we expected. That includes the U.S. But I'd like to highlight a couple of things. Our tissue business in North America has been growing despite a tough comparison versus prior year. But if we look at the discounting activity, particularly in diapers in the U.S., which we saw in the value tiers in the third quarter, it's kind of rolled forward into the fourth quarter. We have been holding share. However, we've chosen not to participate in kind by promoting.
What this translates into is as we look at the fourth quarter, our expected organic growth for the quarter should be more in line with the growth of the weighted average of the categories globally, which is right around 2%, and for the year, that would put organic growth slightly at or below that level, but the important thing is we are growing volume and mix. Our profitability remains strong. We are executing our investments in line with our plan, and we remain fully focused on having the best performing products in the marketplace at the lowest cost at every price tier, and that is our winning platform.
Great. That's helpful. Maybe to wrap up, Mike, we've seen share price dislocation since the Kenvue announcement, obviously not uncommon in large deals. How would you respond to that reaction just in terms of your viewpoint on Kimberly's ability to drive shareholder value from here going forward?
All right, Dara. Don't shoot me if it seems flip. I'm going to say, hey, it's a great buying opportunity.
Okay.
And why do I say that? One, I would say hopefully you get the conviction. We feel great about our base plan and our innovation and our marketing pipeline, our productivity pipeline when it comes. So we feel very strong about that. I feel like the combination with Kenvue is going to give both companies together the opportunity to provide extraordinary everyday care. But I would say a couple of years into the combination after close, we expect to be a company that's going to have top-tier margins in CPG and growth rates on the top and bottom lines that are as good as anyone's or better, right? And that would warrant, I think, a stronger valuation than where both companies sit today. And so we're really bullish on the whole premise of the logic of the transaction.
We're very excited to partner with the Kenvue team to build a better business.
Great. That's very helpful. Well, with that, we're out of time. So we'll wrap up. But thank you so much, gentlemen, for being here. We appreciate it.
Okay. Thank you, Dara.
Thanks for having us.
Appreciate it.