3M exploring US$1b sale of drug delivery systems unit

[CHICAGO] 3M Co, one of the world's largest industrial conglomerates, is exploring a sale of its drug delivery systems unit, which could fetch about US$1 billion, according to people with knowledge of the matter.

The St Paul, Minnesota-based company is working with an adviser to run an auction process for the business, said the people, who asked not to be identified because they weren't authorised to speak publicly.

The business, which makes products including asthma inhalers and skin patches, is likely to draw interest from private equity firms, the people said.

The unit had US$300 million in sales in the nine months ended Sept 30, a decline of about 11 per cent from a year earlier, according to 3M's earnings report in October.

A representative for 3M declined to comment.

3M, which makes everything from Post-It notes to touchscreen displays and automotive adhesives, regularly buys and sells businesses as part of its portfolio management strategy. This year, 3M bought bandage-maker Acelity for US$4.4 billion, its biggest-ever deal. It sold a communications business last year for about US$900 million.

Chief executive officer Mike Roman addressed its divestiture strategy on Thursday at an industry conference, saying if "there is a better natural owner out there, we can create more value for 3M shareholders by divesting those assets". He wasn't referring to a specific business.

The potential sale of the drug delivery systems unit comes even as healthcare proves to be a bright spot for the company. 3M's stock has declined about 19 per cent in the past year and the company has cut its forecast multiple times as a volatile trade environment, headwinds in China and a difficult automotive market weigh on profits.

3M's shares fell 1.7 per cent to US$164.37 on Thursday, giving the company a market value of about US$94.5 billion.

BLOOMBERG