Johnson & Johnson stock drops following dismissal of bankruptcy strategy tied to talc lawsuits
Johnson & Johnson stock is down slightly on Monday afternoon over concern of the fallout from the talcum powder lawsuits.
Video transcript
SEANA SMITH: My pick today, Johnson & Johnson. Shares sinking. We saw it fall right after noon today. Now that came after a federal appeals court dismissed the pharma giant's talc bankruptcy case, ruling that it can't use bankruptcy to resolve more than the 40,000 cancer lawsuits over its baby powder. Now Johnson & Johnson created and spun off a separate unit LTL management in an effort to shield the company from this talc litigation.
The ruling, though, means that Johnson & Johnson will most likely have to defend itself against the claims that tainted talc was in the baby powder that causes cancer. Here now the settlement value of all cases could be around $5 billion. Allie, taking a look at the price drop today, the worst performer in the Dow, that 5 billion number there, that's what really has the Street concerned at this point.
ALLIE CANAL: Yeah, and this just feels like a bad look, right, for J&J. This is already a very controversial legal tactic, limiting the liability, protecting those corporate assets. But the numbers don't lie. As you mentioned, more than 40,000 lawsuits here. And it's interesting because J&J seems to be sticking to this decision.
A spokesperson told the Wall Street Journal that they would challenge the ruling, which was unanimous, by the way, and that it only put the toxic subsidiary into bankruptcy to resolve the litigation for all parties. So I'm curious to see how this plays out. I'm honestly surprised that this is something that could even happen, but we'll just have to wait and see there.
