Another quick band-aid

J&J proposed another settlement of it’s talc liability, over $8B, vs the original $2B. The stock flew.

I thought it was a more straight up shouldering of their liability, that the company would then pass off to the consumer products division when it is spun off this fall, which would probably go BK in a couple years, but the mothership would be home free.

Nope. Not so borderline honest. They still want to do their “Texas two-step” evasion, just with a sweeter offer.

I had a pretty nice payday when the stock popped on the news. Maybe I should cash out tomorrow, and be done with them? I never figured it to be a long term hold, as I expect consumer products to be set up to fail.

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@steve203 why do you expect consumer products to be set up to fail? I assume that you mean “consumer staples” like Band-Aids, not consumer discretionary.

Apart from J&J’s specific liability-related problems, why do you reject the entire consumer product sector?


I am not rejecting the entire consumer products industry. I am specifically referring to J&J’s consumer products operations, which will be spun off this fall. Baby powder being a consumer product, I fully expect that division to be stuck with the liability, if the “Texas Two-step” is rejected entirely, and stuck with paying the $8.9B, if the TTS scheme is eventually approved.

I have mentioned before, how Honeywell spun off it’s Garrett turbocharger division. Honeywell not only stuck Garrett with a pile of debt, it also required Garrett to pay Honeywell’s asbestos liability, even though Garrett never made any products that used asbestos. I laffed when I read the Garrett prospectus, because it was clear the company was set up to fail. Garrett did indeed go BK a few years later. The BK court threw out Garrett’s paying for Honeywell’s liability, so, presumably, Honeywell has that hot potato back on it’s hands.

3M tried to declare it’s ear plug liability was entirely born by the division that made the plugs, then declared that division bankrupt. The court did not buy 3M’s argument that a fully consolidated division could go BK by itself, and tank the plug liability, so, presumably, 3M still has that monkey on it’s back.

J&J’s spin off avoids the pitfalls that foiled the plans of both Honeywell and 3M. Consumer product liability will go with the consumer product division, that will probably be set up to fail, so claimants will not collect the entire $8.9B, or anything like it.