3M to unstick its healthcare unit

The trend for conglomerates to spin off their healthcare units gained another adherent yesterday. Perhaps better known for Scotch tape and Post-it notes, 3M also has a medtech business mainly focused on wound care, dental and healthcare IT products. But not for long: 3M said yesterday that it would spin off the business by the end of next year, keeping a stake of just under 20%. The healthcare unit, which had sales of $8.6bn last year, will become a public company, the idea being that once independent it will be more agile and able to focus on making company-specific investment decisions. But 3M must hope that market conditions improve by the end of 2023. This year’s healthcare spinouts have performed poorly, with Zimvie in particular suffering a dramatic fall in its market cap. Two other separations are in the pipeline, but the conglomerate is not dead yet. Though Johnson & Johnson is disposing of its consumer care business, it is keeping its medtech and pharma operations together; Roche, too, is happy with its drugs and diagnostics under one umbrella. And in March shareholders firmly rejected Toshiba’s plan to spin off its devices business. 

Selected healthcare spin-offs in 2022 & 2023
New group Parent Focus Date First-day SP chg SP change to Jul 26, 2022 Exchange
Zimvie Zimmer Biomet Dental and spinal Mar 1, 2022 -19% -40% Nasdaq
Embecta Becton Dickinson Diabetes Apr 1, 2022 -6% -16% Nasdaq
Esab Enovis* Fabrication technology Apr 5, 2022 -10% -19% NYSE
Bausch + Lomb Bausch Health Ophthalmology May 6, 2022 8% -17% NYSE
Haleon GSK Consumer care Jul 18, 2022 -7% -4% London
GE Healthcare General Electric Medtech Expected early 2023 - - -
As-yet unnamed Johnson & Johnson Consumer care Expected mid-2023 - - -
As-yet unnamed 3M Medtech Expected 2023 - - -
*Colfax spun off Esab, its fabrication business, then changed its name to Enovis. Source: company communications.

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