3M Co. struck a tentative settlement of at least US$10 billion over water pollution claims tied to “forever chemicals,” according to people familiar with the proposed accord, the largest PFAS pact in the U.S. and one of the biggest mass tort deals ever.
3M, the No. 1 maker of per-and polyfluoroalkyl substances, is weighing the deal to head off its first federal trial over the waterproofing agent, set to start June 5 in Charleston, South Carolina, said the people, who asked not to be named discussing the matter because it is private. The judge in Charleston is overseeing the consolidation of about 4,000 PFAS-linked lawsuits.
The company’s shares jumped as much as 11 per cent following the news, with trading volume more than double the daily average. The shares had been down 21 per cent this year through Thursday’s close.
But even amid the stock surge, 3M still faces a daunting overhang. Its overall potential PFAS liability is as great as $143 billion — far more than double its $56 billion market capitalization — for cleanup alone, according to estimates by financial research firm CreditSights.
‘MORE IS NEEDED’
“Our take: We are excited that 3M appears to be making progress, but more is needed before we think we’ll see a real clearing event for the name,” Sanford C. Bernstein & Co. analysts wrote in a note on Friday. “We also emphasize the report of ‘at least’ $10B in settlement, and believe ultimate settlement will end up significantly higher.”
The settlement, which would require approval by 3M’s board, would cover only municipal providers of drinking water to consumers, the people said. It wouldn’t cover suits by state attorneys general over the pollution of rivers and streams, allegations by the federal government, personal injury and property damage claims, or class actions, they said.
“We don’t comment on rumors or speculation,” 3M spokesman Sean Lynch said in a statement.
BIG DUPONT DEAL
Researchers have found that PFAS, an industrial product used since the 1950s in products ranging from computer chips and nonstick frying pans to cosmetics, never breaks down naturally and has to be removed from waterways to landfills or destroyed by burning or with emerging technologies. The US Environmental Protection Agency says PFAS are linked to developmental delays in children and increased cancer risks, and some researchers have linked them to specific cancers.
3M disputes those findings and maintains that PFAS pose no significant threat to public health and welfare.
The potential settlement would be on the heels of a $1.185 billion PFAS settlement announced Friday by Chemours Co., DuPont de Nemours Inc. and DuPont spinoff Corteva Inc. over pollution claims tied to DuPont’s manufacture of the compounds.
The two settlements are part of a much larger potential liability PFAS makers face. Since 2018, 3M alone has settled almost $1 billion of PFAS claims around the U.S. That sum includes a pact made on the eve of trial in 2018 in which the St. Paul, Minnesota-based company agreed to pay $850 million to resolve claims by the state’s attorney general that the chemicals contaminated drinking water and natural resources. 3M admitted no wrongdoing.
IMPACT ON STOCK
Earlier this week 3M, DuPont and other companies agreed to pay more than $100 million to settle a PFAS suit by the city of Rome, Georgia.
The litigation risks have already taken their toll on 3M’s stock. The shares had declined by about 60 per cent since their high in January 2018, in part due to liability concerns, erasing about $100 billion in market value. Some legal experts have warned that 3M may ultimately be forced to seek bankruptcy protection to manage the litigation.
If the latest settlement goes through, it could help ward off such a fate.
The case is Aqueous Film-Forming Foams Products Liability Litigation, 18-mn-2873, US District Court, District of South Carolina (Charleston).