3M Acquires Nida-Core - Analyst Blog

3M Company (MMM) has acquired a Port St. Lucie, FL-based manufacturer of structural honeycomb core and fiber-reinforced foam core materials, Nida-Core Corp. The company did not reveal the terms of the deal.

Nida-Core offers a range of high-strength, low-weight, engineered materials. Through its workforce of approximately 25 people, Nida-Core provides solutions to customers in transportation, marine and renewable energy industries. 

The Nida-Core acquisition strengthens 3M's composite and engineered materials product platform. As per the acquisition agreement, 3M will also take over a company affiliated with Nida-Core, called Structiso SARL, situated in Aniche, France. The acquisition of Structiso is expected to close in the beginning of the second quarter of 2011, subject to fulfillment of regular conditions.

Strong cash flow position and continuously expanding sales revenue provides 3M ample resources to expand through acquisition and innovation of new products. 3M is known worldwide for its innovations, with some of its well-known brands such as Nexcare, Post-it, Scotch, Scotch-Brite, and Scotchgard being the market leaders.

We believe that continued capital expenditure with new product launches should bolster its prospects across most end-markets. The recent acquisitions of Winterthur and Cogent by 3M will help it to further expand its innovative expertise.

However, the company's growth objectives are largely dependent on timing and market acceptances of its new product offerings, including its ability to continually renew its pipeline of new offerings and bring those to the market at acceptable price points. Further, the results have been impacted by worldwide economic and capital market conditions.

Negative consumer sentiment is affecting the retail store traffic. On the corporate side, lower employment levels are negatively reducing office supply purchases in most companies.

3M Company together with its subsidiaries, operates as a diversified technology company with manufacturing operations spread over 60 countries worldwide. It has more than 35 business units organized into six segments: Consumer and Office, Display and Graphics, Electro and Communications, Healthcare, Industrial and Transportation, Safety, Security and Protection Services Business. Major competitors of 3M are Avery Dennison Corporation (AVY), EI DuPont de Nemours & Co. (DD) and Johnson & Johnson (JNJ).

We continue to maintain a Neutral rating on 3M Company for the long term. The company has a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.