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Imerys Considers Sale of Talc Business Linked to J&J Lawsuit

Andrew Noël, Myriam Balezou and Steven Church

(Bloomberg) -- Imerys SA is exploring options for its North American talc operations, which filed for bankruptcy after being drawn into cancer lawsuits connected to Johnson & Johnson’s baby powder, people with knowledge of the matter said.

The company is considering strategic alternatives that could include a sale of the businesses, said the people, who asked not to be identified discussing the private matter. Paris-based Imerys’ U.S. unit, Imerys Talc America, plans to work with advisers at PJT Partners Inc., though a formal mandate will require court approval, the people said.

Three North American units of Imerys filed for Chapter 11 protection from their creditors in February, citing more than 14,000 claims in U.S. courts brought mostly by women who allege the company’s talc caused their ovarian cancer. Others say they have mesothelioma brought on by asbestos in the talc.

The businesses generated about $174 million of combined revenue in 2018, according to a court filing. Deliberations are at an early stage, and no final decisions have been made, the people said. A representative for Imerys declined to comment, while a representative for PJT didn’t respond to requests for comment.

Settlement Costs

Proceeds from any sale could provide funds for settling lawsuits. When the North American talc business filed for bankruptcy, Alexandra Picard, who was chief financial officer at the time, said the goal was to set up a trust to handle cancer and asbestos lawsuits filed against Imerys Talc.

To set up and fund the trust, Imerys Talc planned to negotiate with its creditors, including those with medical claims, and insurers. So far, the company has not sought permission to sell itself at a court-supervised auction, according to court documents.

Under Chapter 11 of the U.S. Bankruptcy Code, cases can be corralled under a single judge and Imerys can pressure plaintiffs to accept lower settlements. Other companies, such as specialty chemical maker W.R. Grace & Co., have used similar filings to shield themselves from billions of dollars in lawsuit liabilities. W.R. Grace spent almost 11 years in bankruptcy before setting up a trust to pay victims of asbestos exposure.

After Imerys filed bankruptcy, J&J tried unsuccessfully to have lawsuits against it halted, arguing that those cases should also be halted while Imerys reorganized and set up a victim’s trust.

Imerys will need to persuade buyers that its industrial-talc business is attractive enough to eclipse potential liabilities linked to J&J products. Talc is also used in cosmetics, plastics, ceramics, paper and coatings, and the $1.1 billion industrial market is growing at 7% a year, according to U.K. supplier Elementis Plc. It’s used to reinforce plastics molded into lightweight car parts, a $600 million market, according to a November presentation by Elementis.

(Updates with Johnson & Johnson attempt to halt lawsuits in eighth paragraph.)

To contact the reporters on this story: Andrew Noël in London at anoel@bloomberg.net;Myriam Balezou in London at mbalezou@bloomberg.net;Steven Church in Wilmington, Delaware at schurch3@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, ;Dinesh Nair at dnair5@bloomberg.net, Dawn McCarty, Rick Green

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