Johnson & Johnson reached an $8.9 billion settlement in ongoing litigation over its talc-based baby powders, leading JNJ stock to rise Wednesday.
Under terms of the deal, Johnson & Johnson subsidiary LTL Management will pay the money over 25 years to resolve more than 60,000 claims that J&J's baby powder caused people to develop cancer. The $8.9 billion sum is an increase from a previously proposed $2 billion.
On today's stock market, JNJ stock jumped 4.5%, ending the regular session at 165.61.
JNJ Stock Climbs Above 50-Day Line
Johnson & Johnson says the settlement isn't an admission of guilt or wrongdoing. The company stood by the safety of its talc products. J&J suspended sales of those products in the U.S. and Canada in 2020 due to declining demand.
"The company continues to believe that these claims are specious and lack scientific merit," said Eric Haas, J&J's worldwide vice president of litigation, in a written statement.
LTL also voluntarily refiled for Chapter 11 bankruptcy. In January, a federal judge said the company couldn't use the bankruptcy system to resolve the talc claims, causing JNJ stock to topple. But using the tort system — which handles personal injuries — would take decades, put a huge burden on LTL and most claimants wouldn't receive compensation, Haas said.
"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," he said.
In response, JNJ stock climbed further above its 50-day moving average, according to MarketSmith.com.
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