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Sep 22, 2020

3M explores US$3.5B sale of food safety division

FILE PHOTO: The 3M logo is pictured on products at an Orchard Supply Hardware store in Pasadena

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3M Co. is working with advisers on the sale of its food safety business, according to people with knowledge of the matter.

The unit, which sells test kits and other products to help foodmakers monitor sanitation and allergens, could fetch about US$3.5 billion, said one of the people, who asked not to be identified because the matter is private.

No final decision has been made and 3M could still opt to retain the business, the people said. A representative of the St. Paul, Minnesota-based company declined to comment.

A sale would give 3M extra cash amid the coronavirus pandemic in exchange for parting with a relatively minor part of its sprawling portfolio. The food safety business generated US$341 million in revenue last year, roughly 5 per cent of the US$7.4 billion posted by the company’s broader health-care unit.

3M rose less than 1 per cent to US$162.34 at the close in New York, giving the company a market value of about US$94 billion. The shares have fallen 8 per cent this year, compared with a 5.8 per cent decline in a Standard & Poor’s index of U.S. industrial companies.

3M’s profits came under pressure in the first half as the pandemic stifled several of the company’s end-markets, including automobile production and electronics.

The manufacturer, which also makes Post-it notes, has since reported improvements across most of its business including double-digit gains in health care in July and August. 3M said earlier this month that third-quarter sales should reach US$8.2 billion to US$8.3 billion, roughly in line with current analyst expectations.