3M combines food safety business with Neogen in $5.3B deal

Combined company will have financial flexibility to capitalize on growth trends in sustainability, food safety and supply chain integrity

Photo courtesy of 3M
Photo courtesy of 3M

Neogen is combining with 3M's food security business in a tax-free, $5.3 billion deal announced Tuesday.

According to Neogen, the combined companies will create an innovative leader in the food safety sector with a comprehensive product range and a strategic focus on the category’s long-term growth opportunities.

The transaction implies an enterprise value for 3M’s Food Safety business of approximately $5.3 billion, including $1 billion in new debt to be incurred by 3M’s Food Safety business.

Existing 3M shareholders will own 50.1 % of the combined company once the transaction closes in the second half of 2022. The company will receive $1 billion in cash and $4.3 billion in equity.

The deal is tax-free due to a reverse Morris trust structure.

The boards of directors of both NEOGEN and 3M have unanimously approved the transaction.

“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 CEO, in a statement.

“The heightened global focus on food security, sustainability and supply chain solutions around the world presents exciting opportunities for NEOGEN to be positioned as an innovative leader at the forefront of the growth and digitization of the industry.”

Adent and NEOGEN’s existing management team will continue to lead the combined company.

“By combining our Food Safety business with NEOGEN, we will create an organization well positioned to capture long-term profitable growth," said Mike Roman, 3M chairman and CEO.

"This transaction further evolves our strategy, focuses our health care business and benefits our stakeholders, as we actively manage our portfolio to drive growth and deliver shareholder value."

The transaction is expected to close by the end of Q3 2022, subject to approval by NEOGEN shareholders, receipt of required regulatory approvals and the satisfaction of other customary closing conditions.

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