3M India's parent '3M' to spin-off Health Care Business; stock slips ~2%

27 Jul 2022 , 03:27 PM

In its latest press release, 3M India informed that 3M, Minnesota declared its intention to spin off its Health Care business, creating two world-class public companies well positioned to pursue their respective growth strategies.

The New 3M will continue to be a global material science innovator serving customers in a variety of industrial and consumer end markets, while Health Care will be a global diversified healthcare technology player centered around wound care, healthcare IT, oral care, and biopharma filtration.

As leading standalone companies, each company is expected to derive benefit from enhanced agility and focus to better position for long-term success, compelling investment profiles appealing to different investor bases, ability to tailor capital allocation strategies, and make company-specific investment decisions to drive innovation and growth, and Distinct boards and management teams comprised of world-class leaders with relevant expertise and track records driving value creation.

New 3M will remain a leading global material science innovator, with $26.8 billion in sales in 2021, thanks to an operating model rooted in science and technology, manufacturing, global capabilities, and iconic brands.

Health Care will concentrate on expansion, based on its proven track record of profitability. Health Care will be well positioned to pursue its strategic objectives with strong cash flow generation.

Health Care is currently expected to be spun off with net leverage of 3.0x – 3.5x EBITDA and to be positioned for rapid deleveraging. Furthermore, New 3M expects to retain a 19.9% stake in Health Care, which it intends to monetize over time.

3M India ended at Rs22,500 per piece, down by Rs422.2 or 1.84% from its previous closing of Rs22,922.20 on the BSE.