3M to Plan $1 Billion Sale of Drug Delivery Systems Unit

(Bloomberg) -- 3M Co., one of the world’s largest industrial conglomerates, is exploring a sale of its drug delivery systems unit, which could fetch about $1 billion, according to people with knowledge of the matter.

The St. Paul, Minnesota-based company is working with an adviser to run an auction process for the business, said the people, who asked not to be identified because they weren’t authorized to speak publicly. The business, which makes products including asthma inhalers and skin patches, is likely to draw interest from private equity firms, the people said.

The unit had $300 million in sales in the nine months ended Sept. 30, a decline of about 11% from a year earlier, according to 3M’s earnings report in October.

A representative for 3M declined to comment.

3M, which makes everything from Post-It notes to touchscreen displays and automotive adhesives, regularly buys and sells businesses as part of its portfolio management strategy. This year, 3M bought bandage-maker Acelity Inc. for $4.4 billion, its biggest-ever deal. It sold a communications business last year for about $900 million.

Chief Executive Officer Mike Roman addressed its divestiture strategy Thursday at an industry conference, saying if “there is a better natural owner out there, we can create more value for 3M shareholders by divesting those assets.” He wasn’t referring to a specific business.

The potential sale of the drug delivery systems unit comes even as health care proves to be a bright spot for the company. 3M’s stock has declined about 19% in the past year and the company has cut its forecast multiple times as a volatile trade environment, headwinds in China and a difficult automotive market weigh on profits.

3M’s shares fell 1.7% to $164.37 on Thursday, giving the company a market value of about $94.5 billion.

To contact the reporters on this story: Kiel Porter in Chicago at kporter17@bloomberg.net;Nabila Ahmed in New York at nahmed54@bloomberg.net;Richard Clough in New York at rclough9@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, ;Brendan Case at bcase4@bloomberg.net, Matthew Monks

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