Maplewood-based 3M announced Tuesday that it plans to spin off its health care business into a separate publicly held company.
“We are positioning 3M for the future, to create more opportunity and greater certainty. There will be two world-class, well-capitalized public companies,” CEO Mike Roman said during a conference call explaining the decision.
3M says its health care operations, including wound and oral care products, information technology for health care providers and biopharma filtration production, accounted for about a quarter of its more than $35 billion in annual revenue in 2021. 3M will also take a nearly 20 percent stake in the new company that makes those products, which it expects to value overall at about three times annual revenue or slightly more.
The company is already selling off its food safety business to Michigan-based Neogen, with that deal expected to close in September. The health care spinoff is expected to be complete by the end of 2023.
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It’s a trend among some of the country’s biggest corporations. General Electric announced in November that it was spinning off its aerospace, energy and health care businesses. Health care giant Johnson & Johnson also said last fall it was splitting up into consumer health care and pharmaceutical businesses. Even breakfast cereal maker Kellogg said this summer it was breaking up into three companies.
In a separate announcement, 3M also said its Aearo Technologies subsidiary, the subject of lengthy litigation regarding the effectiveness of earplugs supplied to the military, is filing for bankruptcy. The move is intended to resolve the more than 200,000 legal claims, although it intends to stay in business and indemnify 3M.
3M executives said they were setting up a $1 billion trust fund, including its insurance assets, to fund claims against the company for its products. 3M maintains its products worked and were safe when properly used.
The announcements Tuesday coincided with the release of the company’s second-quarter earnings statement. The company reported $2.48 per share earnings, down from last year’s $2.75 per share earnings. Sales fell from $8.9 billion last year to $8.7 billion for 2022 — down, but less than analysts had expected.