3M stock soars following $7.35 billion 'forever chemicals' settlement

By Jonathan Stempel, Anshuman Tripathy and Vallari Srivastava

Nov 4 (Reuters) - Shares of 3M hit an 8-1/2-year high on Wednesday after the industrial products company agreed to pay $7.35 billion to settle litigation by people ‌who said its "forever chemicals" injured them, and 3M officials predicted enough claimants would join for the ‌settlement to take effect.

Payouts would cover personal injury claims related to firefighting foam made by 3M and be distributed over nine years to ​as many as 120,000 people, the St. Paul, Minnesota-based company said on Wednesday. It announced the settlement on Tuesday after US markets closed.

The litigation centers on PFAS, short for per- and polyfluoroalkyl substances, in products manufactured by 3M.

"Forever chemicals" do not break down easily in the human body or environment, and have been linked to health issues including higher ‌cholesterol, low birth weight and kidney and ⁠testicular cancer.

The company did not admit liability, and plans a $5.8 billion pre-tax fourth-quarter charge that represents the present value of future payments.

UBS analyst Amit Mehrotra wrote that investors had expected an ⁠approximately $10 billion settlement, and the accord removes a "meaningful overhang" on 3M's shares.

At its peak, 3M stock rose 10% on Wednesday to its highest since March 2018, when it traded above $200. In afternoon trading, the shares were up 9.8% at $194.37.

The settlement ​addresses about ​99% of personal injury claims inside and outside the "aqueous film-forming ​foam" multi-district litigation in the federal court in ‌Charleston, South Carolina.

JUDGE URGES 'SIGNIFICANT TIME AND EFFORT'

Kevin Rhodes, 3M's chief legal affairs officer, said on a conference call on Wednesday that the settlement is designed to address current and future PFAS claims, and 3M will pay most of the money between 2028 and 2033.

Rhodes said 3M can walk away if not enough claimants accept the settlement, "although we do not expect that to happen."

US District Judge Richard Gergel on Wednesday stayed personal injury proceedings against 3M in ‌the litigation, saying the company and claimants should devote "significant time and ​effort" to implementing the settlement.

In a joint statement, plaintiffs' lawyers David ​Hoyle and Fred Thompson said the settlement benefits ​thousands of people who "sought answers and accountability" for nearly a decade.

Foam has often been used ‌to put out high-intensity fires, including on military ​bases and at airports.

PFAS in ​firefighters' protective gear has also included 3M's Scotchlite reflective material.