The company has tentatively agreed to pay more than $5.5 billion to settle more than 300,000 lawsuits, Bloomberg news agency reported on Sunday, citing people familiar with the agreement. Some analysts had estimated the cost of a settlement at around $10 billion. A 3M spokesman told the agency it does not comment on rumors and speculation.
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This is how investors are reacting
A report on a possibly surprisingly light settlement in a dispute over allegedly defective earplugs gives investors access to 3M on Monday. The shares of the conglomerate finally rose in New York by 5.25 percent to 104.14 US dollars. The company has tentatively agreed to pay more than $5.5 billion to settle more than 300,000 lawsuits, Bloomberg news agency reported on Sunday, citing people familiar with the matter.
The total could therefore be significantly lower than feared by analysts. According to RBC analyst Deane Dray, that would be a figure at the lower end of his guidance range, which was between $5 billion and $10 billion. According to the expert, it would be a surprise if the payment is spread over five years as reported. This would be beneficial for 3M as it would give the group more flexibility in terms of cash flow and liquidity.
However, a comparison would still have to be approved by many authorities, Dray pointed out. “However, if this agreement is accepted by all parties, it would free 3M from one of the two major legal uncertainties that have weighed on shares in recent years,” added the expert.
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NEW YORK (dpa-AFX)
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