3M to spin off healthcare business
2022.07.26 16:10
FILE PHOTO: The logo of 3M is seen at the 3M Tilloy plant in Tilloy-Lez-Cambrai, France, August 18, 2019. REUTERS/Pascal Rossignol/File Photo
(Reuters) -3M Co said on Tuesday the industrial giant plans to spin off its healthcare business, joining a raft of manufacturing firms that are looking to simplify their business and boost their share price.
Corporate break-ups are on the rise amid a growing consensus on Wall Street that companies perform best when their focus is streamlined, as well as increasing pressure from activist hedge funds to boost investor returns.
In the last one year, General Electric (NYSE:GE) Co, Johnson & Johnson (NYSE:JNJ) and Toshiba (OTC:TOSYY) Corp have announced plans to break up or divest businesses.
3M’s healthcare business, which contributed about one-fourth of total company revenue in 2021, will focus on wound care, oral care and healthcare technology.
“The decision to spin off our health care business will result in two well-capitalized, world-class companies, well positioned to pursue their respective priorities,” 3M Chairman and Chief Executive Officer Mike Roman said.
Shares of the company, which makes everything from Post-It notes to industrial sandpaper, were up 3.3% at $138.50 in premarket trading.
3M, which will retain a stake of 19.9% in the new unit, expects to complete the transaction by end of 2023.
The diversified manufacturer on Tuesday reported a fall in second-quarter adjusted profit as COVID-19 lockdowns in China impacted the company’s manufacturing operations in the country.
3M’s adjusted profit fell to $2.48 per share from $2.75 per share a year earlier, however, beat analysts’ average estimate of $2.42 per share.
