Shares of
3M
shot higher in late trading Thursday after the company announced a settlement to support remediation of PFAS—or so-called “forever chemicals”—with public water providers across the country.
3M (ticker: MMM) stock was up 5.6% in after-hours trading. The agreement has a present value of $10.3 billion and is payable over 13 years.
The company said the agreement isn’t an admission of liability. If the deal isn’t approved by the court, or certain conditions aren’t fulfilled, 3M said it would defend itself in the litigation.
“This is an important step forward for 3M, which builds on our actions that include our announced exit of PFOA and PFOS manufacturing more than 20 years ago, our more recent investments in state-of-the-art water filtration technology in our chemical manufacturing operations, and our announcement that we will exit all PFAS manufacturing by the end of 2025,” said 3M chairman and CEO Mike Roman.
The co-lead counsel for the plaintiffs, Paul J. Napoli, said the settlement “sends a clear message that corporations like 3M must bear the responsibility for the aftermath of the chemicals they produce.”
PFAS are technically known as per- and polyfluoroalkyl substances, and the Environmental Protection Agency is working toward tightening regulation of the chemicals.
3M and a handful of other companies produced the compounds, which have been found in water supplies. The agreement announced looks similar to a $1.2 billion settlement recently announced by
DuPont de Nemours
(DD),
Corteva
(CTVA), and
Chemours
(CC).
After that announcement, RBC analyst Deane Dray addressed the potential for a 3M settlement in the range of $10 billion, writing that the reason settlements are being reached now is litigation was about to begin, adding that legal exposure represented by the settlement was only one of many multibillion-dollar exposures faced by the company.
“The bottom line is that 3M’s total PFAS liability is in no way ring-fenced with [a] settlement, in our view,” Dray wrote earlier this month.
3M will also face potential personal injury awards and punitive damages related to PFAS production. 3M referred Barron’s back to its news release when asked to comment on additional liabilities.
The company also faces litigation over potential faulty earplugs sold to the military. Liability for that issue could reach $10 billion, added Dray.
Legal overhangs are one of the reasons he rates shares Sell and has a $95 price target for the stock. Shares closed Thursday at $100.43.
3M stock is off about 23% over the past year while the
S&P 500
has gained about 15%. Legal issues have weighed heavily on investor sentiment.
While the Thursday announcement is a clear positive, some questions remain.
Write to Al Root at [email protected]
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