L'Oreal explores selling off talc-related legal liabilities

L'Oreal has begun exploring strategies to manage rising US legal liabilities tied to its use of talc and other chemical ingredients in some cosmetic products. According to a report by the Wall Street Journal, the company's US unit is working with restructuring advisers Weil Gotshal & Manges and investment bank Ducera Partners to address lawsuits alleging that talc products caused illness.

As of June 30, L'Oreal faced about 760 US proceedings related to claims of asbestos particles in talc-containing cosmetic products, up from approximately 620 at the end of 2023. The company strongly contests these claims, as stated in its latest half-year report. L'Oreal is considering transferring these tort liabilities into a separate corporate entity to sell them to an outside investor, which would allow the company to isolate its legal exposure from its operating businesses.

The Journal noted that L'Oreal's advisers are looking into a sale similar to Honeywell's divestiture of certain asbestos liabilities to Delticus, a corporate liability acquisition platform, last year. This approach aims to address the claims without resorting to Chapter 11 bankruptcy proceedings.

L'Oreal is not alone in facing legal challenges over talc. Johnson & Johnson has spent billions of dollars over more than a decade fighting lawsuits alleging its talc products cause ovarian cancer. In July, J&J agreed to pay an estimated $5.5 billion to resolve tens of thousands of lawsuits. Avon Products also initiated Chapter 11 proceedings in 2024 to address its debt and talc liabilities.

Additionally, L'Oreal is confronting thousands of lawsuits alleging that its hair relaxer products could cause cancer in women. In September, Arizona sued L'Oreal and its US subsidiary, claiming the company hid evidence that the products could be carcinogenic. L'Oreal USA has maintained its confidence in the safety of its products, dismissing these claims as legally and scientifically unfounded.