(Reuters) – Johnson & Johnson said Friday that they would split into two, separating its consumer health division that sells patches and baby powder from its pharmaceutical and medical technology stores.
The historic breakup comes when J&J in the face of nearly 40,000 lawsuits alleging its Baby Powder and other talcum products contained asbestos and caused cancer, which the company denies. The plaintiffs include women suffering from ovarian cancer and others battling mesothelioma.
CEO Alex Gorsky told The Wall Street Journal that the controversy did not play a role in the decision to break up J&J. The company aims to complete the separation within 18 to 24 months.
In October, J&J carried out a separate corporate reorganization aimed entirely at addressing its debt.
divided into two parts, relief of talc debts to a newly formed subsidiary. The subsidiary, known as LTL Management LLC, then moved to North Carolina.
Within days of these moves, LTL filed for bankruptcy protection in Charlotte. In legal circles, the series of transactions is known as a "Texas two-step."
J&J has offered to contribute $ 2 billion to resolve remaining litigation disputes as part of the newly formed subsidiary's bankruptcy restructuring.
Earlier this week. , a bankruptcy judge in North Carolina who oversaw the proceedings, transferred the case to New Jersey, where J&J is headquartered. He also stopped litigation against J&J for 60 days, extending to the health care conglomerate a legal shield already provided to LTL, the unit under bankruptcy protection.
healthy company to manipulate the bankruptcy system without applying for Chapter 1
Congress Democrats have enacted legislation that would ban the use of division mergers to remove debts that J&J did, and also limit the opportunities for companies that have not filed for bankruptcy from obtaining legal protection that extends to those covered by Chapter 11 judicial protection.
J&J , a blue-chip company with a market value in excess of $ 400 billion, has spent close to $ 1 billion defending itself against litigation. Settlements and judgments have cost New Brunswick, New Jersey-based company about $ 3.5 billion more, although it has won in some cases.
J&J stopped selling Baby Powder in the US and Canada in May 2020, partly due to of what are called "disinformation" and "unfounded allegations" about the talc-based product. It maintains that its consumer talk products are safe and has been confirmed by thousands of tests to be asbestos-free. claim that the company's talc caused their ovarian cancer.