3M Finds a Business It’s Willing to Part With
The divestiture of a food safety division makes sense, but it’s unlikely to sway investors.
Not much of a breakup, but it’s a start.
Photographer: Luke Sharrett/Bloomberg
It turns out the adhesive that is supposed to bind 3M Co.’s sprawling business model isn’t that sticky after all.
The industrial giant announced on Tuesday that it was combining its food safety division with Neogen Corp. through a tax-efficient reverse Morris trust transaction. The deal values the 3M business — which sells allergen testing tools, yeast count measurers and hygiene monitoring systems to food processors and manufacturers — at about $5.3 billion, including $1 billion of new debt that will be issued. It’s 3M’s largest divestiture, surpassing the $1 billion sale of its billboard advertising operations in 1997 and the 1996 spinoff of its floppy-disk unit. And yet, before today, it would be a pretty safe bet that most 3M investors were only dimly aware that the company even had a food safety unit. The business is the smallest subdivision of 3M’s larger health-care operations, and its results are reported in the appendix of the company’s earnings presentations.