3M Co (NYSE:MMM) said late yesterday it plans to spin out its approximately US$8.6 billion health-care business by the end of the year.
The healthcare spin-off would include its wound care, healthcare IT, oral care, and biopharma filtration operations.
The conglomerate said the decision will enable its health-care business to make its own investment decisions and drive growth and innovation.
It will retain a 19.9% stake in the business. 3M’s health-care business generated about US$8.6bn in sales in 2021, the company said.
The core company will reposition itself in the global material science sector and said it anticipates “no changes to the company's capital allocation priorities through the completion of the separation”.
"Today's actions advance our ability to create value for customers and shareholders," said 3M chairman and chief executive officer Mike Roman.
"Disciplined portfolio management is a hallmark of our growth strategy. Our management team and board continually evaluate the strategic options that will best drive long term sustainable growth and value.”
The health-care business, which is levered by up to 3.5 times underlying earnings, is expected to deleverage following the separation. The deal needs to be approved by 3M’s board and regulators.
Goldman Sachs (NYSE:GS) & Co and PJT Partners are financial advisers and Wachtell, Lipton, Rosen & Katz is serving as legal counsel on the spin-off.
3M said separately that its subsidiary Aearo Technologies had initiated voluntary chapter 11 bankruptcy protection proceedings to resolve litigation concerning its combat arms earplugs after 235,000 claims were filed against the product.