The board of directors of 3M Company (NYSE:MMM) has given the green light for the planned spin-off of its healthcare business into a distinct publicly traded company.
The newly spun-off entity will operate independently under the name Solventum Corporation and is set to commence trading on the New York Stock Exchange (NYSE) on April 1, 2024, under the ticker symbol SOLV. Meanwhile, 3M will retain its trading identity under the ticker symbol MMM.
In a strategic move, 3M’s board has approved a distribution plan entailing 80.1% of Solventum’s outstanding shares to be allocated to existing shareholders of 3M. The remaining 19.9% of Solventum shares will be held by 3M and will be gradually monetized for five years following the completion of the spin-off.
According to the distribution plan, 3M shareholders will be entitled to receive one share of Solventum stock for every four shares of 3M stock they hold as of the record date set for the distribution, which is scheduled for March 18, 2024. The distribution is expected to occur before the commencement of trading on April 1, 2024, subject to the satisfaction of the remaining conditions.
The strategic rationale behind the spin-off is aimed at unlocking value for both entities, allowing them to sharpen operational focus, optimize capital allocation strategies, and enhance financial agility. Solventum is poised to tap into a global market estimated at around $93 billion, with anticipated growth from 4-6% through 2026. The new entity will operate across four key segments: Medical Surgical, Dental Solutions, Health Information Systems, and Purification & Filtration.
Market Performance
The company has been buoyed by robust performance in its advanced materials and OEM businesses within the Transportation and Electronics segment. However, challenges persist, notably in declining demand for disposable respirators within the Safety and Industrial unit. At the same time, softness in the stationery and office businesses continues to weigh on the Consumer unit.
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