Johnson & Johnson (JNJ) shares climbed on Wednesday morning after the drug and consumer products maker announced a multibillion-dollar agreement with thousands of plaintiffs over accusations its baby powder and other talc products caused cancer.
The company said it would pay $8.9 billion over 25 years to resolve the current and future talc claims. It noted that it had secured commitments from more than 60,000 current plaintiffs to support the resolution.
- J&J shares climbed on Wednesday after announcing an $8.9 billion settlement agreement over accusations its baby powder and other talc products caused cancer.
- More than 60,000 current plaintiffs agreed to support the resolution.
- LTL Management LLC, a subsidiary of J&J, refiled for Chapter 11 bankruptcy protection in order to get approval of a reorganization plan.
J&J attorney Erik Haas explained that the company “continues to believe that these claims are specious and lack scientific merit,” but that resolving them this way “is both more equitable and more efficient,” and allows plaintiffs to be compensated in a timely manner. The lawsuits argued that asbestos in the talc products led to users developing mesothelioma and ovarian cancer.
J&J also noted that its LTL Management LLC (LTL) subsidiary has refiled for Chapter 11 bankruptcy protection in order to get approval of a reorganization plan to go forward with the settlement. Johnson & Johnson wants to pass the responsibility for dealing with the claims to LTL, but in January a federal appeals court invalidated the so-called “Texas two-step” maneuver, ruling LTL wasn’t in financial distress.
Prior to the announcement, attorneys representing thousands of plaintiffs indicated they would fight any attempt by J&J to deal with the litigation in the bankruptcy court.
Shares of Johnson & Johnson jumped 3% on Wednesday morning following the settlement announcement. They’ve lost 7% of their value so far this year.