3M Co. is working with Goldman Sachs Group Inc. to sell components of its electronics business that the industrial- and consumer-products maker has decided are underperforming, people with knowledge of the matter said.
The business units collectively represent about $1 billion in sales, said one of the people, who asked not to be identified because the information is private. 3M will probably sell them piecemeal since there isn’t an obvious buyer for the entire group, the person said. The units could collectively fetch about $1 billion if buyers are found, another person said. 3M reported sales of $31 billion in 2013.
Selling off the businesses reflects Chief Executive Officer Inge Thulin’s effort to push innovation throughout the company as it cuts costs and focuses on finding growth in health care, energy and aerospace. Since taking over at St. Paul, Minnesota-based 3M in February 2012, Thulin has increased spending on research and development, realigned business units and identified underperforming businesses.
“These are the first rumblings that have come out in terms of a piece of the business of any size that’s being identified as a candidate” for sale, said Matt Arnold, a St. Louis-based analyst with Edward Jones & Co. “It makes sense that it’s in this area given the fact that this has been one of the weaker pieces of the 3M portfolio.”
The shares rose 1.1 percent to $134.34 in New York, giving 3M a market value of $89 billion. The stock has gained 30 percent in the past year.
The Electronics and Energy unit, which sells products from film and tapes to touch screens and cables, had sales of $5.4 billion last year, down 1.2 percent from 2012. By comparison, total revenue at 3M rose 3.2 percent.
Thulin said in November 2012 that the company was conducting a strategic review of units with revenue totaling $2.5 billion that could be fixed, closed or sold. At the time, Thulin declined to say which businesses were part of the review.
As part of that review, the company said it was combining its security-systems division and traffic-safety units, which resulted in 300 job cuts. 3M also sold Scientific Anglers and Ross Reels, which make fishing line and reels, last year. The electronics units being sold are also a result of that review, according to the people familiar with the situation.
Jacqueline Berry, a spokeswoman for 3M, declined to comment on the plans for the electronics businesses, saying the company doesn’t discuss rumors or speculation. Michael Duvally at New York-based Goldman Sachs also declined to comment.
3M is a barometer for the global economy with sales of consumer, health-care, industrial, electronics and safety products in all regions of the world. The company is also considered a manufacturing bellwether because its industrial tapes, films and abrasives require short order times, providing early signals in demand shifts.
The company said in December it plans to spend as much as $10 billion on acquisitions through 2017.
“They seem to be sharpening their pencil on both sides of the portfolio, both purchasing and selling assets, which is what we want to see them actively doing,” said Arnold, who has a buy rating on 3M.