3M to buy wound-care product maker Acelity in $6.7bn deal
Industrial group trims share repurchase programme as a result of transaction
3M on Thursday said it would acquire a maker of wound care products for roughly $6.7bn, including net debt, even as the industrial group last month announced plans to shed jobs as part of a restructuring.
The Minnesota-based company will finance the transaction with a combination of available cash and proceeds from the issuance of new debt.
The conglomerate behind everything from Post-it notes to industrial products agreed to buy Acelity and its KCI subsidiaries — which make a broad range of wound care products. 3M is buying the group from a consortium of funds advised by buyout group Apax Partners alongside affiliates of Canada Pension Plan Investment Board and the Public Sector Pension Investment Board.
“Acelity is a recognised leading provider of advanced wound care technologies and solutions and an excellent complement to our healthcare business,” said Mike Roman, 3M chief executive officer.
The company expects the deal to be dilutive earnings per share by 35 cents in the first 12 months following the completion of the deal, including transaction costs. Excluding one-time transaction costs, 3M expects the deal to be accretive to earnings per share by 25 cents over the same period.
As a result of the deal, 3M scaled back its share buyback programme to between $1bn to $1.5bn, down from $2bn to $4bn. Acelity generated 2018 revenues of $1.5bn.
The news of the acquisition comes after 3M last month said it would shed 2,000 jobs globally as part of a restructuring and reduced its full-year earnings guidance. The company recently realigned its portfolio to four business groups from five, in its efforts to drive productivity, reduce costs and boost cash flow.
The transaction, which is subject to regulatory approval, is expected to close in the second half of the year.
Credit Suisse acted as financial adviser to 3M. Cleary Gottlieb Steen & Hamilton LLP acted as legal counsel to 3M.