St. Paul, Minn.-based 3M will retain its transdermal drug delivery components business, according to a news release. The business being divested has annual global sales reaching approximately $380 million.
Subject to closing and other adjustments, 3M expects to receive the $650 million in a combination of cash, an interest-bearing security and a 17% non-controlling interest in the new company. Initial reports earlier this week said the company was working with an advisor to stage an auction for the business. People with knowledge of the situation told Bloomberg that the auction would likely draw interest from private equity firms.
The company’s drug delivery division makes transdermal drug patches, microneedle delivery systems, nasal devices, oral inhalers and packaging films for drug delivery. 3M is also developing a smart inhaler and is looking for pharmaceutical partners for the project.
3M expects the transaction to close in the first half of 2020, with approximately 900 of its employees slated to join the new company following the sale’s completion. 3M said it expects a gain of 45¢ to 50¢ per share from the transaction. Morgan Stanley acted as a financial advisor during the deal, while Cleary Gottlieb Steen & Hamilton acted as legal counsel.
“The drug delivery business is a leading provider of transdermal and inhalation delivery technologies,” 3M chairman & CEO Michael Roman said in the release. “This transaction will allow us to focus more resources on our core health care business as well as retain a share in the value of the drug delivery business as it grows over the coming years.”
Shares of MMM were down -0.4% at $168.15 per share in midday trading today.