3M Co. (NYSE:MMM) has reportedly agreed to pay about $5.5 billion to settle the second lawsuit of 2023. The latest settlement is related to the sale of earplugs to the U.S. military in the period between 2003 and 2015. The years-long lawsuit alleged that 3M’s subsidiary, Aearo Technologies, knowingly sold defective earplugs.
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The proposed settlement amount is likely to be paid over five years. It is worth mentioning that the settlement proposal has not yet been approved by 3M’s board.
The settlement amount is significantly lower than the over $10 billion that analysts were expecting. Nevertheless, 3M settled another lawsuit in June for $10.3 billion regarding claims that chemicals used in its products contaminated drinking water. These legal obligations are likely to have a significant impact on the company’s financials.
Earplugs Case in Brief
The concerned earplugs were designed to safeguard users’ hearing from loud noises like explosions. Over 300,000 military service members claimed to have experienced hearing loss because the earplugs loosened on their own when worn.
Meanwhile, 3M claimed that the earplugs functioned effectively during soldiers’ training and argued that any issues with their performance might be due to incorrect usage.
It is worth mentioning that Aearo Technologies filed for bankruptcy protection last year in an attempt to address its legal liabilities. However, in June, the bankruptcy court dismissed the claims and requested that 3M CEO Michael Roman and other executives investigate the matter.
Is MMM a Good Stock to Buy?
MMM has a Hold consensus rating based on one Buy, nine Hold, and four Sell ratings assigned over the past three months. The average MMM stock price forecast of $115.14 represents 16.36% upside potential. The stock has declined about 16% year-to-date.
