Motley Fool Money J&J Attempts a “Texas Two-Step”
Apr 5, 2023
Tim Beyers, an investment analyst at The Motley Fool, dives into Johnson & Johnson's massive $9 billion settlement over talc lawsuits and the implications of its 'Texas Two-Step' legal strategy. He discusses potential impacts on J&J’s spinoffs and the scrutiny facing Activision Blizzard from the U.S. Department of Justice. Meanwhile, Emily Flippen, a senior analyst, tackles Chewy's recent challenges, including a loss of 250,000 customers, and explores growth strategies for addressing these setbacks.
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Intentional Jump in Settlement Amount
- Johnson & Johnson's proposed $9 billion settlement is significantly higher than the $2 billion previously allocated.
- This suggests a strategic maneuver, potentially using bankruptcy law to limit future liability.
Texas Two-Step Explained
- J&J's initial attempt to shift liability through a subsidiary bankruptcy was rejected by the court.
- The revised plan, with increased payout and claimant backing, aims to cap liabilities and resolve the issue.
Moving Forward
- Settling the talc cases allows J&J to move forward, despite the tragic circumstances.
- The agreement provides compensation to claimants and potentially adds value for J&J investors.