3M Co (NYSE:MMM) has tentatively agreed to pay more than $5.5 billion to resolve over 300,000 lawsuits alleging that the company sold defective combat earplugs to the US military.
The settlement amount is approximately half of the roughly $10 billion that some financial analysts had predicted 3M would end up paying due to allegations that the earplugs failed to adequately protect the hearing of service members.
As a result, shares of the St Paul, Minnesota-based conglomerate were up over 5.8% in early trading Monday in New York.
The deal should help avert a potentially much larger liability that 3M had sought to mitigate through a controversial bankruptcy case, a strategy that ultimately collapsed. Legal experts and industry observers have noted that 3M appears to have negotiated a favorable deal, considering the protracted nature of the litigation that has weighed on the company for nearly a decade.
Under the terms of the settlement, 3M, a manufacturer of popular consumer products such as Scotch tape and Post-it notes, will disburse the settlement amount over five years, according to sources who requested anonymity as they were not authorized to speak publicly about the agreement.
The settlement still requires approval from 3M's board.