Following the successful spin-off of its healthcare business, 3M's stock, trading as Solventum (NYSE: SOVL), rose throughout the day. 3M ended Monday's session up 6.1% as investors hailed the spin-off for several reasons. In contrast, Solventum lost 0.7% by day's end.
3M has finished its spin-off Over a year had passed while investors waited for the spin-off to be finalized. Several months of behind-the-scenes preparation for the company's IPO have culminated in the formation of Solventum.
An "important day" for 3M and Solventum, according to 3M CEO Mike Roman, who added, "Both companies are positioned to pursue their respective growth and tailored capital allocation plans."
At the market closure on March 18, 3M stockholders were given one Solventum share for every four 3M shares they owned. Even though 3M plans to sell off its 19.9% investment in Solventum over the next five years, it has maintained ownership of the company overall.
Can 3M claim victory here? Conglomerates have lost favor with investors in recent years, which may explain the healthcare spin-off's seeming surprise given that 3M's healthcare division has been the company's best-performing segment in recent quarters.
Generici has reduced its workforce. Both IBM and Johnson & Johnson's consumer products divisions, Kenvue and IBM, spun off their respective businesses.
Because the financial outcomes of a spin-off are more transparent, investors have more leeway to choose and management are more easily held to account.
That won't magically fix 3M's problems, but it might help the company get back on track with its growth. The fact that investors are bidding up 3M shares while driving down Solventum suggests a preference for the industrial division over the healthcare division.
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