What you should know about the 3M spin off

US multinational conglomerate 3M is listing its healthcare business in a bid to streamline revenue and boost investor income. Find out everything we know so far about the 3M spin off.

3M spin off explained

3M Co (MMM) announced on July 23 that it would be spinning off its healthcare business into a new listed company. This comes as a wave of other US companies – especially in the healthcare sector – have streamlined their businesses and boosted investor returns via spin offs and demergers.

3M as a whole has underperformed in recent years due to supply chain disruption, currency fluctuations and the rising cost of living. So, the spin off is an attempt to boost 3M’s value, and allow both the new business and the old to build on current revenues, and focus their resources more efficiently.

3M will retain a stake worth 19.9% in the medical supplies business but sell that holding off over time.

3M spin off date

There’s no date for the 3M spin off yet, but the transaction is expected to be completed by the end of 2023, depending on when it’s approved by regulators.

How much will the new company be worth?

3M’s health business could be worth as much as $45 billion by the company’s estimates. It had approximately $9 billion in annual sales according to the company’s reports, which accounts for almost a quarter of the company’s total revenue.

What will happen to 3M shares after the split?

3M shares have already seen a boost following the announcement, and the company will be hoping this marks the end of the downtrend it’s seen so far in 2022. The company’s share price was down 19.4% in the year to date, sitting at 134.12, but on the day of the announcement shares jumped up 4.9% to a closing price of 140.7.

3M will also be hoping that the spin off will draw a line under the litigation proceedings that have brought the company’s share price down over the last year. The healthcare giant has sought protection for the unit that makes earplugs for the military after over 290,000 military members said they suffered hearing damage as a result of the company’s products.

How to trade 3M shares with City Index

You can speculate on whether 3M shares will rise or fall in the run up to the demerger with City Index in just four easy steps:

1. Open a City Index account, or log in if you’re already a customer
2. Search for ‘3M’ in our award-winning platform
3. Choose your position and size, and your stop and limit levels
4. Place the trade

Alternatively, you can try out share trading risk free by signing up for our demo trading account.