3M has 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.
“These 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-capitalised, 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, the ability to tailor capital allocation strategies and make company-specific investment decisions to drive innovation and growth. Each business will also provide compelling investment profiles appealing to different investor bases and each will have distinct boards and management teams comprised of world-class leaders with relevant expertise and track records driving value creation.
The 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 capitalise on customer opportunities aligned with key global megatrends such as electronics, safety, mobility, digitisation, home improvement, and sustainability. It expects to continue to deliver profitable growth, generate robust cash flow, and return capital to shareholders while maintaining a strong balance sheet.
Health Care, with approximately $8.6 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, and 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.
The Company expects to complete the transaction by year-end 2023, subject to satisfying all customary conditions and receiving all regulatory approvals.