What happened
Shares of 3M (MMM 0.46%) were gaining today on news that the conglomerate had reached a multibillion-dollar settlement in a lawsuit regarding faulty earplugs used by the U.S. military.
As of 10:07 a.m. ET, the stock was up 4.5% on the report.
So what
Yesterday, Bloomberg reported that 3M had agreed to pay more than $5.5 billion to settle more than 300,000 claims that its earplugs used by the U.S. military were defective.
The news, which has yet to be confirmed through any official statement from 3M, would put to rest an issue that has dogged the stock for months. It's also less than some analysts had feared as earlier forecasts estimated it could cost the company as much as $10 billion.
The report follows news just two months ago that it settled a lawsuit over claims that its PFAS ("forever chemicals") polluted public water supplies. According to that settlement, 3M will pay a present value of $10.3 billion over 13 years to help public water suppliers clean up PFAS.
Now what
3M also received some positive analyst notes this morning as Citigroup said that the settlement was lower than Wall Street's expectations, and Bank of America said the Combat Arms settlement "would be a material positive for 3M."
Investors tend to cheer when a major settlement like this is announced as it removes the uncertainty around the issue and allows the company to move forward.
3M still faces a number of challenges, including declining sales across most of the business due to the weak macroeconomic environment, but with both the PFAS and now the earplugs litigation seemingly resolved, the company is in a stronger position than it was just months ago.
Expect to learn more from the company when the settlement becomes official. Meanwhile, 3M continues to aim for a spin-off of its healthcare segment by the end of the year, which it says will help unlock shareholder value.
