3M to combine food-safety business with Neogen
[1/2]The 3M logo is seen at its global headquarters in Maplewood, Minnesota, U.S. on March 4, 2020. REUTERS/Nicholas Pfosi/File Photo Purchase Licensing Rights
Dec 14 (Reuters) - 3M Co (MMM.N) said on Tuesday it would merge its food-safety business with food testing and animal healthcare products maker Neogen Corp (NEOG.O) in a tax-free transaction, as the industrial giant sharpens its healthcare focus.
The deal gives the unit, which makes products for pathogen testing and allergen detection, an enterprise value of about $5.3 billion, including $1 billion in new debt.
3M, the biggest U.S. producer of N95 masks, will receive about $1 billion.
"This transaction further evolves our strategy, focuses our health care business and benefits our stakeholders," 3M Chief Executive Officer Mike Roman said in a statement.
The industrial conglomerate, which also makes Post-It notes and industrial sandpaper, had tapped advisors last year for a potential sale of the unit, Bloomberg reported. read more
Shares of Neogen climbed 6% premarket, while those of 3M rose 1.29%.
Neogen boss John Adent will lead the combined company, which will be 50.1% owned by 3M and is expected to have an enterprise value of about $9.3 billion.
The deal is being structured as a Reverse Morris Trust, a strategic way to divest a division tax-free.
Centerview Partners LLC is the financial adviser and Weil, Gotshal & Manges the legal counsel to Neogen.
Goldman Sachs is the financial adviser and Wachtell, Lipton, Rosen & Katz the legal counsel to 3M.
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Reporting by Aishwarya Nair in Bengaluru; Editing by Sriraj Kalluvila
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