Neogen to acquire 3M’s food safety business
3M is selling its food safety division to Neogen Corp. The purchase will take the shape of a Reverse Morris Trust, in which 3M’s food safety division will be split off to its shareholders before merging with a Neogen subsidiary.
In order to ensure that 3M shareholders acquire around 50.1% of the merged firm upon acquisition completion, Neogen will issue shares to 3M shareholders, with current Neogen shareholders holding approximately 49.9% of the combined company. Subject to closing and other adjustments, 3M will also receive compensation in connection with the sale, estimated to be worth $1 billion.
The deal values 3M’s food safety division at about $5.3 billion. Based on Neogen’s closing share price as of December 13, the merged company is anticipated to be valued $9.3 billion after it is all said and done.
“This combination will enhance Neogen’s position in this new era of food security, equipping us with an expanded product line that enables us to capitalize on our growing footprint, reaching more customers, more often, while continuing our track record of strong and consistent growth,” said John Adent, Neogen’s president and chief executive officer. The increased attention being paid to supply chain solutions, sustainability, and food security globally offers Neogen great chances to establish itself as a cutting-edge pioneer at the forefront of the expansion and digitization.
Neogen stated that the combination will increase its capacity for infection identification and indication testing. Neogen will also have more opportunities outside of the US and Europe, and it will enable the company to take the lead in the food security industry’s digitization.
The combined business will be run by Mr. Adent and the current management group of the company. At the close, 3M will nominate two independent board members, expanding the size of Neogen’s board of directors.
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Mike Roman, CEO of 3M, stated, “We will create an organisation well-positioned to capture long-term profitable growth by combining our food safety business with Neogen.” “We actively manage our portfolio to create development and deliver shareholder value, and this deal further evolves our strategy, focuses our health care company, and benefits our stakeholders.”By the end of 2022’s third quarter, the deal is anticipated to close.