3M Corp.
MMM -1.42%
agreed on Tuesday to use his food safety business
Neogen Corp.
NEOG -0.20%
, a food testing and animal health specialist, to create a joint venture worth $ 9.3 billion, including debt.
Based in Lansing, Michigan, Neogen has a market value of $ 4.3 billion , while 3M’s is around $ 100 billion. The Wall Street Journal previously reported that such a deal was imminent.
3M is based in St. Paul, Minnesota, and sells everything from post-it notes to Nexcare bandages and N95 masks. The food safety business is part of the Healthcare business, one of its four main areas.
The transaction is structured as a Reverse Morris Trust, a tax efficient way for companies to divest a business with the Neogen management team leading the combined company. It values the 3M unit at $ 5.3 billion. Existing 3M shareholders will own 50.1% of the combined company.
Many of 3M’s industrial groups, such as
General Electric Co.
and
Emerson Electric Co.
have split or divested assets in response to investor demand for focused companies.
Neogen offers test kits and other products that track hygiene and allergens throughout the food supply chain from farm gate to plate.
CEO of Neogen,
John Adent,
who will lead the merged company, said in an interview that talks about the deal, which dates back to 2019. He said it would create a more efficient food safety company with a balance sheet poised for future deals. “That gives us the yardstick we need,” he says.
The deal would expand Neogen’s product offering and research and development capabilities, the companies said. Through the combination, Neogen’s food safety segment would account for approximately 70% of its total sales, and the combined company would have expected sales of approximately $ 1 billion for the first full year after closing.
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