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," the company said in a statement.

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

3M is hoping this 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.

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."

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

The stock notched further gains on Wall Street on Tuesday following news of the settlement.