Cigarette companies Philip Morris (PM), British American Tobacco (BTI), and Japan Tobacco (TYO:2914) have offered to pay $32.5 billion to settle a tobacco lawsuit in Canada.
The settlement offer was made as part of court-appointed mediation that followed a 2015 ruling by a Quebec court that awarded damages to more than 100,000 smokers and ex-smokers.
The smokers brought a class action lawsuit against the tobacco companies, claiming that they knew since the 1950s that their product was both addictive and causes cancer.
After an appeal, a Quebec court in 2019 upheld the initial ruling and awarded smokers in the Canadian province $15 billion.
That award drove the Canadian subsidiaries of all three tobacco companies to seek bankruptcy protection. The subsidiaries have been in a court-supervised mediation process since then.
The three tobacco companies said in a statement that the proposed settlement marked a positive step towards finding a resolution to the Canadian lawsuits.
However, the proposed settlement of $32.5 billion still needs to be approved by the courts and claimants in the case, and the matter is not yet finalized.
The tobacco companies said the settlement would be funded by cash on hand and money that’s generated from future sale of tobacco products in Canada.
Voting on the proposed settlement is scheduled to take place this December, and, if accepted by claimants, a court hearing to conclude the case would likely be scheduled early next year.
