Manufacturing giant 3M said Tuesday it has reached a $6 billion settlement over claims by US military veterans that its earplugs were faulty and failed to protect their hearing.

The company is hoping the agreement draws a line under the long-running legal saga, which has seen the company hit by thousands of lawsuits by veterans complaining of hearing loss.

The mediated agreement will see 3M "contribute a total amount of $6.0 billion between 2023 and 2029, which is structured under the agreement to include $5.0 billion in cash and $1.0 billion in 3M common stock," 3M said in a statement.

In 2008, 3M acquired Aearo Technologies, which sold the earplugs to the American military between 2003 and 2015.

In its statement, 3M did not admit liability for the products, which it said "are safe and effective when used properly."

It added it was prepared to "continue to defend itself in the litigation if certain agreed terms of the settlement agreement are not fulfilled."

- Less than expected -

Analysts had been expecting the settlement could be substantially larger than the figure the company unveiled.

The financial markets have reacted positively to US media reports in recent days indicating a smaller settlement could be within reach, with 3M shares ending Monday up more than five percent.

The company's stock advanced a further 1.4 percent Tuesday on news of the settlement.

3M has been looking to make progress on a series of lawsuits brought against it in recent years, including thousands relating to long-lasting chemicals known as PFAS -- short for per- and polyfluoroalkyl substances.

Also known as "forever chemicals," there are accusations they may have contaminated US drinking water.

PFAS have been detected all over the globe in water, air, fish, and soil, according to the US Environmental Protection Agency (EPA), which says scientific studies have shown that exposure to them could be linked to harmful health effects in humans and animals.

In June, 3M agreed to pay more than $10 billion to settle lawsuits over contamination of many US public water systems related to PFAS.

"This is an important step forward for 3M," chief executive Mike Roman said in a statement announcing the decision.

He added the company "will exit all PFAS manufacturing by the end of 2025."

In the settlement, the company said this payment would be made over a period of 13 years.

As in the case announced Tuesday, 3M did not admit liability, and said it was "prepared to continue to defend itself in the litigation."