NEOGEN Corporation and 3M announced that they have entered into a definitive agreement pursuant to which 3M will separate its Food Safety business and simultaneously combine it with NEOGEN in a transaction that is intended to be tax efficient to 3M and its shareholders for U.S. federal income tax purposes.
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The combination will create an innovative leader in the food safety sector with a comprehensive product range and a strategic focus on the category’s long term growth opportunities.
The transaction implies an enterprise value for 3M’s Food Safety business of approximately $5.3 billion, including $1 billion in new debt to be incurred by 3M’s Food Safety business.
This represents an implied multiple of approximately 32x and 27x CY 2022E Adjusted EBITDA pre and post run rate synergies respectively, based on NEOGEN’s closing price as of December 13, 2021. 3M’s Food Safety business will fund to 3M consideration valued at approximately $1 billion, subject to closing and other adjustments.
The combined company is expected to have an enterprise value of approximately $9.3 billion, based on NEOGEN’s closing share price as of December 13, 2021.
Under the terms of the definitive agreements, which involve a tax free “Reverse Morris Trust” structure, existing NEOGEN shareholders will continue to own approximately 49.9% of the combined company, and 3M shareholders will receive approximately 50.1% of the combined company.
A combination will create a global innovator in food safety with the geographic footprint, product range and innovation capabilities to further capitalize on attractive and enduring growth trends.
The company will have a significantly expanded product offering in food safety, particularly in indicator testing and pathogen detection areas, which complement NEOGEN’s existing microbiology lines. NEOGEN will also be able to offer 3M food safety customers its genomics services, which deliver innovative DNA testing – a new offering to 3M food safety customers.
The transaction is expected to close by the end of Q3 2022, subject to approval by NEOGEN shareholders, receipt of required regulatory approvals and the satisfaction of other customary closing conditions. ■
Modified arctic air combined with a moisture-laden area of low pressure along the Gulf Coast will continue to allow for a broad area of winter weather impacts from the Lower Mississippi Valley to the Southeast today into early Saturday morning.