Actions of 3M (MMM -11.36%) ended the day higher after the industrial conglomerate completed the spinoff of its healthcare business, now known as Solventum (NYSE:SOVL).
Investors cheered the split for several reasons, and 3M closed Monday’s session up 6.1%. Solventum, however, ended the day down 0.7%.
3M finalizes spin-off
Investors have been waiting for more than a year for the spin-off to come to fruition. The creation of Solventum represents the culmination of several months of behind-the-scenes work to prepare for the company’s IPO.
3M CEO Mike Roman called it an “important day” for 3M and Solventum, saying, “Both companies are well positioned to continue their respective growth and tailored capital allocation plans.”
3M shareholders received one share of Solventum for every four 3M shares they held as of market close on March 18. 3M also retained a 19.9% stake in Solventum, although it said that stake will be monetized over the next five years as it is sold. disabled.
Is this a victory for 3M?
The healthcare spinoff may seem like a surprising move given that it has been 3M’s best-performing segment in recent quarters, but conglomerates have fallen out of fashion with investors in recent years. GE lost weight. IBM swarmed KyndrylAnd Johnson & Johnson separated Kenvueits consumer products business.
Splits provide more choice for investors and make it easier to hold managers accountable because the bottom line is simpler.
It’s not a panacea for 3M, but it could make it easier for the company to return to growth. By pushing the stock up and pushing Solventum down, investors seem to be saying that they prefer 3M industrial to its health component.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool posts and recommends Kenvue. The Motley Fool recommends 3M, International Business Machines and Johnson & Johnson and recommends the following options: Long January 2026 $13 calls on Kenvue. The Mad Motley has a disclosure policy.