- New 3M will remain a leading
global material science innovator serving diverse end markets, with
science and technology, manufacturing, global capabilities, and
iconic brands
- Standalone Health Care business will be a leading global
diversified healthcare technology company focused on wound care,
oral care, healthcare IT, and biopharma filtration
- Tax-free transaction expected to be completed by year-end
2023
- 3M intends to complete the
previously announced separation of Food Safety business through a
split-off transaction with a targeted closing date of September 1, 2022, subject to certain
conditions
ST.
PAUL, Minn., July 26,
2022 /PRNewswire/ -- 3M
(NYSE: MMM) today announced its intent to spin off its Health Care
business, resulting in two world-class public companies well
positioned to pursue their respective growth plans. The New
3M will remain a leading global
material science innovator serving customers across a range of
industrial and consumer end markets, and Health Care will be a
leading global diversified healthcare technology company focused on
wound care, healthcare IT, oral care, and biopharma filtration.
"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 decision to spin off our Health
Care business will result in two well-capitalized, world-class
companies, well positioned to pursue their respective
priorities."
As leading standalone companies, each is expected to benefit
from:
- Enhanced agility and focus to better position for long term
success;
- Ability to tailor capital allocation strategies and make
company-specific investment decisions to drive innovation and
growth;
- Compelling investment profiles appealing to different investor
bases; and,
- Distinct boards and management teams comprised of world-class
leaders with relevant expertise and track records driving value
creation.
New 3M: A Leading Global
Material Science Innovator
New 3M, with $26.8 billion in sales in 2021, will remain a
leading global material science innovator, powered by an operating
model rooted in science and technology, manufacturing, global
capabilities, and iconic brands. The company will continue to
leverage its unique and differentiated innovation to capitalize on
customer opportunities aligned with key global megatrends such as
electronics, safety, mobility, digitization, home improvement, and
sustainability.
New 3M expects to continue to
deliver profitable growth, generate robust cash flow, and return
capital to shareholders while maintaining a strong balance sheet.
New 3M will continue to prioritize
strategic opportunities, including investments in growth,
productivity, and sustainability while maintaining a proactive
approach to portfolio management. 3M
anticipates that there will be no changes to the Company's capital
allocation priorities through the completion of the separation.
Health Care: A Leading Global Diversified Health Care
Technology Company
Health Care, with approximately $8.61 billion in sales in 2021, will
be a diversified healthcare technology leader with a deep and
diverse portfolio of trusted brands, global capabilities, and
leadership in attractive end market segments such as wound care,
oral care, healthcare IT, and biopharma filtration. Health Care
will be better positioned to deliver industry-leading innovation
that enables better, smarter, and safer healthcare for patients
worldwide.
Health Care will focus on growth, grounded in its strong track
record of profitability. With robust cash flow generation, Health
Care will be well positioned to pursue its strategic
objectives.
Transaction Details
Health Care is currently expected to be spun off with net
leverage of approximately 3.0x – 3.5x EBITDA and to be positioned
for rapid deleveraging. Additionally, New 3M expects to retain a stake of 19.9% in Health
Care, which will be monetized over time.
The spin-off is intended to be tax-free for U.S. federal income
tax purposes. The Company expects to complete the transaction by
year-end 2023. The transaction is subject to satisfaction of
customary conditions, including final approval from the
3M Board of Directors, filing and
effectiveness of a Form 10 registration statement with the U.S.
Securities and Exchange Commission, receipt of a tax opinion,
receipt of a private letter ruling from the Internal Revenue
Service, satisfactory completion of financing, and receipt of other
regulatory approvals.
3M will retain responsibility for
non-Health Care related litigation, including those related to
Combat Arms Earplugs and PFAS.
Advisors
Goldman Sachs & Co and PJT Partners are serving as financial
advisors and Wachtell, Lipton, Rosen & Katz is serving as legal
counsel on the spin-off of 3M's Health Care business.
Update on Pending Food Safety Transaction with Neogen
3M intends to complete the
transaction through a split-off with a targeted closing date of
September 1, 2022, subject to
approval by Neogen shareholders, receipt of required regulatory
approvals and the satisfaction of other customary closing
conditions.
Taking Action to Efficiently and Equitably Resolve Combat
Arms Earplugs Litigation
In a separate press release issued today, 3M announced it is taking steps to resolve
litigation related to Combat Arms Earplugs. Aearo Technologies and
related entities ("Aearo Technologies"), all of which are
wholly-owned 3M subsidiaries, have
voluntarily initiated chapter 11 proceedings. With this change in
strategy, this process is intended to resolve claims related to
Combat Arms Earplugs in a manner that is more efficient and
equitable to all parties, including plaintiffs with claims that are
determined to be entitled to compensation. 3M and its other businesses have not filed for
chapter 11 and will continue to operate as usual. Aearo
Technologies' operations are also expected to continue operating in
the ordinary course.
To access the press release, please visit our press release page
here.
Q2 2022 Earnings Results and Conference Call
In a separate press release issued today, 3M announced its second-quarter 2022 results and
updated its outlook for the full-year 2022.
3M will conduct an investor
teleconference at 9 a.m. EDT
(8 a.m. CDT) today. Investors can
access this conference via the following:
- Live webcast at http://investors.3M.com.
- Live telephone:
-
- Call 800-762-2596 within the U.S. or +1 212-231-2916 outside
the U.S. Please join the call at least 10 minutes before the start
time.
- Webcast replay:
-
- Go to 3M's Investor Relations website at
http://investors.3M.com and click on "Quarterly Earnings."
- Telephone replay:
-
- Call 800-633-8284 within the U.S. or +1 402-977-9140 outside
the U.S. (for both U.S. and outside the U.S., the access code is
21999290). The telephone replay will be available until
11:30 a.m. EDT (10:30 a.m. CDT) on August
1, 2022.
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1
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Includes Food Safety
(~$0.4B), expected to be divested by Sept. 1, 2022, that will no
longer be part of the Health Care business.
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Forward-Looking Statements
This news release contains forward-looking information about
3M's financial results and estimates and business prospects that
involve substantial risks and uncertainties. You can identify these
statements by the use of words such as "anticipate," "estimate,"
"expect," "aim," "project," "intend," "plan," "believe," "will,"
"should," "could," "target," "forecast" and other words and terms
of similar meaning in connection with any discussion of future
operating or financial performance or business plans or prospects.
Among the factors that could cause actual results to differ
materially are the following: (1) worldwide economic, political,
regulatory, capital markets and other external conditions and other
factors beyond the Company's control, including natural and other
disasters or climate change affecting the operations of the Company
or its customers and suppliers; (2) risks related to public health
crises such as the global pandemic associated with the coronavirus
(COVID-19); (3) foreign currency exchange rates and fluctuations in
those rates; (4) liabilities related to certain fluorochemicals,
including lawsuits concerning various PFAS-related products and
chemistries, and claims and governmental regulatory proceedings and
inquiries related to PFAS in a variety of jurisdictions; (5) legal
proceedings, including significant developments that could occur in
the legal and regulatory proceedings described in the Company's
Annual Report on Form 10-K for the year ended Dec. 31, 2021, as updated by the Company's
Current Report on Form 8-K dated April 26,
2022, and any subsequent quarterly reports on Form 10-Q (the
"Reports"); (6) competitive conditions and customer preferences;
(7) the timing and market acceptance of new product offerings; (8)
the availability and cost of purchased components, compounds, raw
materials and energy (including oil and natural gas and their
derivatives) due to shortages, increased demand or supply
interruptions (including those caused by natural and other
disasters and other events); (9) unanticipated problems or delays
with the phased implementation of a global enterprise resource
planning (ERP) system, or security breaches and other disruptions
to the Company's information technology infrastructure; (10) the
impact of acquisitions, strategic alliances, divestitures, and
other unusual events resulting from portfolio management actions
and other evolving business strategies, and possible organizational
restructuring; (11) operational execution, including scenarios
where the Company generates fewer productivity improvements than
estimated; (12) financial market risks that may affect the
Company's funding obligations under defined benefit pension and
postretirement plans; (13) the Company's credit ratings and its
cost of capital; (14) tax-related external conditions, including
changes in tax rates, laws or regulations; (15) matters relating to
the proposed spin-off of the Company's Health Care business,
including whether the transaction will be completed, or if
completed, will be on the expected terms; the risk that the
expected benefits will not be realized; the risk that the costs or
dis-synergies will exceed the anticipated amounts; the ability to
satisfy the various closing conditions; potential business
disruption; the diversion of management time; the impact of the
transaction (or its pendency) on the Company's ability to retain
talent; potential impacts on the Company's relationships with its
customers, suppliers, employees, regulators and other
counterparties; the ability to realize the desired tax treatment
(including whether an Internal Revenue Service private letter
ruling will be sought or obtained); the risk that any consents or
approvals required will not be obtained; risks associated with
financings that may be undertaken and indebtedness that may be
incurred in connection with the transaction; and (16) matters
relating to the voluntary chapter 11 proceedings of the Company's
subsidiary Aearo Technologies and certain of its affiliates (the
"Aearo Entities"), including legal risks related to the chapter 11
proceedings; potential impacts to the Company's reputation and its
relationships with customers, suppliers, employees, regulators and
other counterparties and community members; potential impacts to
the Company's liquidity or results of operations, including risks
related to the amount that will be necessary to fully and finally
resolve all of the Company's obligations to make payments to
resolve such claims under the terms of its funding and
indemnification agreement with the Aearo Entities; and the Aearo
Entities' ability to navigate the chapter 11 proceedings to obtain
approval and consummation of a plan of reorganization. Changes in
such assumptions or factors could produce significantly different
results. A further description of these factors is located in the
Reports under "Cautionary Note Concerning Factors That May Affect
Future Results" and "Risk Factors" in Part I, Items 1 and 1A
(Annual Report) and in Part I, Item 2 and Part II, Item 1A
(Quarterly Reports). The Company assumes no obligation to update
any forward-looking statements discussed herein as a result of new
information or future events or developments.
3M Company and
Subsidiaries
SUPPLEMENTAL
FINANCIAL INFORMATION
NON-GAAP
MEASURES
(Unaudited)
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[A]
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[B]
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[A-B]
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Year ended December
31, 2021 (millions)
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3M
Company
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Health
Carea
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New
3M
(non-GAAP
measure)b
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Total Net
Sales
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$
35,355
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$
8,597
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$
26,758
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(a) Includes Food Safety revenue of $368M, which is
expected to be divested by Sept. 1, 2022, and therefore will no
longer be part of the Health Care business.
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(b) New 3M net sales, a non-GAAP measure, is not defined
under U.S. GAAP and, therefore, should not be considered a
substitute for other measures prepared in accordance with U.S. GAAP
and may not be comparable to similarly titled measures used by
other companies. 3M defines "New 3M" net sales as consolidated 3M
Company net sales minus net sales of its Health Care business
segment. 3M announced it will spin-off its Health Care business.
The Company believes New 3M net sales information is meaningful to
investors as they consider how the spin off of the Health Care
business may impact 3M's operating results.
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Investor Contact:
Bruce Jermeland
(651) 733-1807
Diane Farrow
(612) 202-2449
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SOURCE 3M