Abbott Shares Rise After $385 Million DOJ Settlement Over Formula Recall

Shares of Abbott Laboratories (NYSE: ABT) rose on Monday after the company announced a $385 million settlement with the U.S. Department of Justice (DOJ), resolving a probe into the 2022 infant formula recall at its facility in Sturgis, Michigan.

Settlement Details

The agreement resolves a criminal investigation and lawsuit brought by the DOJ, as well as lawsuits filed by certain relators and the Attorneys General of several states. In a statement, Abbott said the DOJ has now closed its criminal investigation into the matter.

According to the company, the settlement does not constitute any finding of fault or an admission of liability. The claims stemmed from the company's manufacturing practices and the subsequent voluntary recall of powdered infant formula in February 2022.

Market Reaction and Context

Investors reacted positively to the news, which removes a significant legal overhang for the company. Abbott's shares climbed 1.3% in Monday's trading session. The 2022 recall created a nationwide shortage of infant formula in the United States, drawing intense scrutiny from regulators and lawmakers.

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Background of the Investigation

Abbott reiterated its position that its products were not responsible for illnesses. The company stated that genetic sequencing on samples from two of the affected infants did not match the strains of *Cronobacter sakazakii* found in its plant.

Additionally, Abbott noted key findings from health agencies:

• The U.S. Centers for Disease Control and Prevention (CDC) concluded there was no definitive link between the Sturgis facility and the clinical cases under investigation.
• The Food and Drug Administration (FDA) confirmed in March 2022 that unopened product from the homes of the infants tested negative for the bacteria.
• Abbott stated that no unopened, distributed infant formula from the facility has ever tested positive for *Cronobacter sakazakii*.