Dive Brief:
- The board of directors of 3M approved the planned spinoff of the company’s healthcare business, marking another step toward the anticipated completion of the transaction on April 1, the company announced Friday.
- The conglomerate hatched the plan to turn its healthcare unit into an independent company in July 2022 and, after a delay, is now weeks away from closing the deal and creating Solventum.
- Investors will receive one share of Solventum for every four shares of 3M they hold on March 18. The transactions will result in 3M shareholders owning roughly 80% of the new company.
Dive Insight:
Solventum will start life as an independent company with about 22,000 employees across four business units. Those units, which generated total sales of $8.2 billion and net income of $1.35 billion in 2023, will offer a range of medical technologies across categories including wound care, dental solutions, health information systems, and purification and filtration.
The details of the planned transaction are now finalized. 3M CEO Mike Roman, who the company announced Tuesday would retire May 1, said in a statement he was “pleased to have taken another step as Solventum prepares to independently pursue its mission.”
3M will award roughly 80% of Solventum’s stock to its shareholders and keep the rest for itself. The conglomerate plans to monetize its nearly 20% stake in the new company within five years of completing the spinoff.
The global addressable market across all Solventum’s units will grow by 4% to 6% a year from 2024 to 2026, driven by the anticipated expansion of health information systems, 3M forecasts. While health information systems was the smallest segment in 2022, with 3M valuing the market at $9 billion, the conglomerate forecasts it will grow at 6% to 8% in the next few years.