JNJ Offers to Pay $8.9B to Settle Talc Litigation

Johnson & Johnson (JNJ:US) long-term investors will hope that the company’s latest offer worth $8.9 billion to settle the baby powder litigation can remove a major overhang on the stock.

In an update released earlier this week, JNJ said it has offered to pay $8.9 billion to settle the case and allegations that its talc-based baby powder caused cancer. The healthcare giant was forced to end sales of its popular talc after it was the subject of thousands of lawsuits.

JNJ’s subsidiary LTL Management also refiled for Chapter 11 bankruptcy protection. Last year, the court judge issued a green light to JNJ to resolve the lawsuits in bankruptcy court. However, the verdict was overturned by the U.S. Court of Appeals.

“Resolving this matter through the proposed reorganization plan is both more equitable and more efficient, allows claimants to be compensated in a timely manner, and enables the Company to remain focused on our commitment to profoundly and positively impact health for humanity,” said Erik Haas, J&J’s worldwide vice president of litigation, in a statement.

JNJ already spent billions of dollars on litigation costs. As a result, investors will hope that the latest offer would be enough to settle the case and improve visibility going forward. The proposed $8.9 billion settlement would be paid over the next 25 years.

At least 11 JNJ stock transactions involving Congress members were reported for this year alone. Most notably, Representatives Ro Khanna and Daniel Goldman reported larger-than-usual transactions involving the sale of JNJ shares.

The stock is more than 7% year-to-date.