Lawsuits over the forever chemicals that have haunted 3M for more than a decade are nearing an end. The company will pay $7.35 billion, and shares of $MMM responded by rising as much as 10%.
Who would have thought in 2022 that $MMM would be trading near its ATH four years later? I did buy the shares back then, but clearly sold too early, albeit at a profit. Yesterday, the shares rose 9.5% and are now “only” 11% below their ATH.
But why such a big jump? The company reached an agreement that removes one of the biggest risks that had weighed on its shares for years.
3M will pay $7.35 billion to settle lawsuits over health damage allegedly caused by PFAS, known as forever chemicals, found in its firefighting foams, according to the plaintiffs.
Up to 120,000 people will receive the money, with payments spread over 9 years, most of them falling between 2028 and 2033. 3M does not admit liability under the agreement. In the fourth quarter, the company will book a one-time pre-tax charge of $5.8 billion, equivalent to the present value of future payments.
But the PFAS case is not completely over for 3M. In 2023, the company agreed to pay $10.3 billion to U.S. cities over drinking-water contamination, and last year it reached an agreement with the state of New Jersey. The current agreement also allows 3M to withdraw if it is not accepted by enough plaintiffs, although management does not expect that scenario. Similar disputes are also ongoing for $DD, $CTVA and $CC.