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3M Company, an American multinational company operating in the fields of industry, consumer goods, worker safety, and U.S. health care, announced its plans to set up long-term value by spinning off its health care business.
As per Reuters, 3M Company revealed its spin-off plans on Tuesday, July 26. With this move, the industrial firm just joined the other major companies that are also aiming to simplify their business and increase their stock price.
It was noted that many other companies have also taken the same step last year. They have broken up their firms to form new units, and this trend was actually on the rise last year. This happened after Wall Street agreed that firms do better when their focus is streamlined.
In fact, last year, Toshiba, Johnson & Johnson, and General Electric Co. have all taken the spin-off route and either split up or divested their businesses. Now 3M's healthcare business is planning the same thing and will be forming a unit that will focus on healthcare technology, wound care, and oral care. The company’s healthcare line was said to have contributed about one-fourth of 3M’s total revenue last year.
"Today's actions advance our ability to create value for customers and shareholders. Disciplined portfolio management is a hallmark of our growth strategy,” Mike Roman, 3M’s chairman and chief executive officer, said in a press release.
The company chief went on to say, “Our management team and board continually evaluate the strategic options that will best drive long-term sustainable growth and value. The decision to spin off our Health Care business will result in two well-capitalized, world-class companies, well positioned to pursue their respective priorities."
The new 3M will continue to bring profitable growth and stir up strong cash flow. It is also expecting to return capital to its shareholders while keeping a strong balance sheet.
The company will carry on prioritizing strategic opportunities and investing for its growth, sustainability, and productivity. Finally, 3M said it does not expect any changes to its capital allocation priorities even after the separation of its healthcare unit is completed.
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