(PPG - Get Report)
said on Tuesday that it has reached a settlement agreement with insurers and asbestos claimants for all current and future personal injury claims against the company totaling around $2.7 billion over 21 years.
The agreement calls for the company to establish a trust for claimants funded with contributions from PPG. The company plans to record a $500 million after tax charge to reflect the current value of cash contributions over a 21-year period, as well as 1.4 million shares of PPG stock. PPG's insurers will also make substantial contributions to the settlement, bringing the total to roughly $2.7 billion.
Most of the personal injury claims arose from PPG's investment in the now-bankrupt Pittsburgh Corning, which manufactured asbestos-containing high-temperature pipe insulation from 1962 to 1972. The company filed for bankruptcy in 2000, and PPG Industries wrote down its investment in the company.
In a press release PPG said, "Although we continue to believe we're not responsible for Pittsburgh Corning's products, we feel this agreement will benefit our company and shareholders in view of the number of claims and runaway verdicts against other companies."
Lehman upgraded PPG Industries on the news, saying that yesterday's settlement "provides an additional catalyst to an attractive fundamental story." The brokerage house moved the company to strong buy from buy due to its inexpensive valuation.
Shares of PPG closed at $57.10 Tuesday before the news.