3M plans to spin off health-care business by end of next year

3M plans to spin off its health-care operations while the remaining business focuses on global material science.

The move will allow both standalone companies to be more agile with tailored investment strategies and distinct boards and management, 3M said on Tuesday (Jul 26) in a statement. The tax-free transaction is expected to be completed by the end of 2023, subject to final approval from the board and regulators. New 3M expects to retain a stake of 19.9 per cent in the health-care business, which will be monetised over time.

The maker of Post-it notes, touchscreen displays and medical supplies announced the spinoff along with second-quarter earnings results. The company cut its full-year sales and profit forecasts as the surging value of the US US dollar added to pressures from snarled supply chains, inflation and softening demand in some of its key markets.

With about US$8.6 billion in sales last year, health-care accounted for almost 1-quarter of 3M's total revenue. The unit makes products across markets, including dental cements, bandages and biopharmaceuticals.

The company's shares rose 1.4 per cent at 6.50 am in New York.

In a separate statement, 3M said it is taking steps to resolve litigation related to its Combat Arms Earplugs, with its Aearo Technologies business voluntarily initiating Chapter 11 proceedings. 3M said it's committing US$1 billion to fund a trust to resolve claims related to the earplugs worn by military personnel. BLOOMBERG