Michigan-based Neogen is combining with 3M's food security business in a tax-free, $5.3 billion deal announced Tuesday.
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.
Food safety is part of 3M's health care division, one of the four main lines of business for the Maplewood-based company, which has a market value of about $100 billion.
"By combining our food safety business with Neogen, we will create an organization well positioned to capture long-term profitable growth," 3M chief executive Mike Roman said in a statement. "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."
Roman made a similar comment earlier this month when asked if 3M was planning to go the way of General Electric and spin off core units.
"We have a history as a company of shifting our portfolio to where we can uniquely drive value," he said during the Credit Suisse Virtual Industrials Conference. "That increasingly over the past decade has included divestitures."
The bulk of 3M's food safety products relate to laboratory testing and environmental hygiene. Neogen also produces testing supplies and sanitation devices in addition to animal DNA sequencing and other genomics services.
