USA – 3M has announced its intent to spin off its Health Care business, resulting in two public companies joining a raft of US manufacturers looking to simplify their business and boost investor returns.
The new 3M will remain a global material science innovator serving customers across a range of industrial and consumer end markets.
The new healthcare business unit will focus on wound and oral care, healthcare IT and biopharma filtration, the material science company said in a release. That includes products like its bandages, skin adhesives, oral aligners, air purifiers and optical lenses.
Additionally, New 3M expects to retain a stake of 19.9% in Healthcare, which will be monetized over time.
The spin-off is intended to be tax-free for US federal income tax purposes. The company expects to complete the transaction by year-end 2023.
The new 3M will remain a global material science innovator serving customers across a range of industrial and consumer end markets.
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 US Securities and Exchange Commission.
Other conditions that must be met include 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.
A raft of companies such as GE Healthcare, BD and Co., and GSK have been breaking up their businesses amid a growing consensus that they perform best when the focus is streamlined, as well as increasing pressure from activist investors to boost shareholder returns
Earplugs unit seeks bankruptcy protection
The company said Aearo Technologies, its subsidiary that produces Combat Arms Earplugs, filed for chapter 11 bankruptcy proceedings to establish a trust to resolve all legal claims related to the product that have weighed on its shares this year.
3M is facing claims from more than 290,000 former and active military members who say the earplugs are defective and damaged their hearing, according to Reuters.
The company’s health-care products also include the Bair Hugger surgical warming system, which is currently the subject of nearly 6,000 lawsuits. 3M maintains that the product has no relation to surgical-site infections.
3M said it believe the earplugs were safe and effective when used properly, but that they nevertheless face increasing litigation.
3M is also simultaneously spinning off its food safety business. That branch will merge with Neogen and is expected to be divested by September.
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