Shares of 3M (MMM 0.67%) finished the day higher after the industrial conglomerate completed the spin-off of its healthcare business, which is now known as Solventum (NYSE: SOVL).
Investors cheered the spin-off for a number of reasons, and 3M closed Monday's session up 6.1%. Solventum, however, finished the day down 0.7%.
Image source: 3M.
3M completes the spin-off
Investors had been waiting over a year for the spin-off to go through. The creation of Solventum represents the culmination of several months of work behind the scenes to prepare the company to go public.
3M CEO Mike Roman called it an "important day" for 3M and Solventum, saying, "Both companies are positioned to pursue their respective growth and tailored capital allocation plans."
3M shareholders received one share of Solventum for every four shares of 3M stock they owned at the market close on March 18. 3M also retained a 19.9% stake in Solventum, though it said that will be monetized over the next five years as it sells it off.
Key Data Points
Is this a win for 3M?
The healthcare spin-off might seem like a surprising move as it had been the best-performing segment in 3M in recent quarters, but conglomerates have fallen out of fashion with investors in recent years. GE has slimmed down. IBM spun off Kyndryl, and Johnson & Johnson separated Kenvue, its consumer products business.
Spin-offs give investors more choice and make it easier for managers to be held accountable as financial results are more straightforward.
That's not a cure-all for 3M, but it could make it easier for the company to return to growth. By bidding the stock higher and pushing Solventum lower, investors seem to be saying they prefer the industrial 3M over its healthcare component.
