Johnson & Johnson (JNJ) has been ordered to pay $1 billion in damages to Auris Health shareholders for breaching a 2019 acquisition agreement. The ruling, issued by the Delaware Court of Chancery, comes after a two-week trial where it was determined that Johnson & Johnson failed to provide adequate support for Auris’ iPlatform technology. This technology was key to unlocking additional payments for Auris’ investors.
The dispute revolves around Johnson & Johnson’s failure to meet their commitments in the $3.4 billion acquisition of Auris Health. J&J had promised up to $2.35 billion more if Auris reached certain technological milestones. However, the judge ruled that Johnson & Johnson did not fulfill their obligations promptly, leading to a breach of contract. The ruling also highlighted how J&J’s actions inadvertently pitted Auris’ iPlatform technology against its own Verb device, hindering the advancement of the former.
Johnson & Johnson has contested the ruling, arguing that it was based on an unreasonable interpretation of the contract and intends to appeal. They maintain that the missed milestones were due to technical issues with Auris’ devices. Additionally, they asserted that the merger agreement allowed them to utilize Auris’ products to benefit their own robotics program. However, Vice Chancellor Lori Will, who presided over the case, dismissed these claims as unsubstantiated.
As a result of the ruling, JNJ stock saw a slight dip of 0.25% on Wednesday, closing at $166.74. The outcome of this case underscores the importance of contractual obligations in large-scale acquisitions and the potential consequences of failing to meet them.
