3M Looks To Sell Food Safety Business For $3.5B: Bloomberg

3M Co MMM is exploring a sale of its food safety business division for $3.5 billion, reports Bloomberg.

What Happened: The post-it notes manufacturer's food safety division makes test kits for food makers to monitor sanitation and allergens. The company could rake in $3.5 billion by selling its business to raise cash as pandemic has hit the food and restaurant industry.

3M could still opt to retain its business as a final decision has not been made, according to Bloomberg.

Why It Matters: Coronavirus has sent ripples across industries and 3M is no exception. As the company grapples with the grim business situation, raising cash during the pandemic helps it stabilize.

3M reported a 12.2% decline in second-quarter revenue and the company didn't provide guidance as the full impact of the pandemic was not known.

Earlier this month, 3M issued guidance for third-quarter revenue of $8.2 billion to $8.3 billion, in-line with analyst expectations.

Credit Suisse has maintained an Outperform rating on 3M with a price target of $197 on Sep. 16.

Benzinga's Take: The food safety business generated $341 million in revenue last year — representing approximately 5% of the overall health care unit, according to Bloomberg. In such a scenario, parting away with the small portion of revenue to raise cash makes sense for 3M.

Price Action: 3M shares closed 0.61% higher to $162.34 on Tuesday. The stock is down 8% year-to-date lagging behind the S&P Industrial index, which is down 5.8%.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: NewsHealth CareAsset SalesMediaGeneralApple. coronavirusBloombergfood safetyIndustrial Goods Sector
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!