U.S – Food safety solutions provider, Neogen Corporation, has wound up the earlier announced merger with 3M’s Food Safety business to create an innovative leader in the food safety sector.
The transaction which was first announced on December 14, 2021, will provide the companies with a comprehensive product range and a strategic focus on the category’s long-term growth opportunities.
Neogen Corporation develops and markets products and services dedicated to food and animal safety.
The company’s Food Safety Division markets dehydrated culture media, and diagnostic test kits to detect foodborne bacteria, natural toxins, genetic modifications, food allergens, ruminant by-products, drug residues, plant diseases and sanitation concerns.
The combination of Neogen and 3M’s Food Safety business creates a leading innovator with an enhanced geographic footprint, innovative product offerings, digitization capabilities, and financial flexibility to capitalize on robust growth trends in sustainability, food safety, and supply chain integrity.
3M’s former Food Safety business is a leading provider of food safety testing solutions. It offers a broad range of food safety testing solutions that support multiple industries within food and beverage, helping producers to prevent and protect consumers from foodborne illnesses.
The business has built a broad global presence with products used in more than 60 countries and a diversified revenue base of more than 100,000 end-user customers.
According to the agreement terms, Neogen will appoint two additional Directors to its Board, increasing the company’s Board to a total of 10 members.
“We welcome the former 3M Food Safety team to the Neogen family and are thrilled to unite two organizations with a shared focus of being a leading company in the development of solutions for food and animal safety.
“Together, we will be at the forefront of food safety and digitization, positioning Neogen as an innovative global industry leader,” said John Adent, Neogen’s President and Chief Executive Officer.
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.
The Reverse Morris Trust is a form of tax-avoidance employed by companies. This tactic enables the company to sell off unwanted assets without incurring tax obligations on gains arising from the sale of these assets.
The transaction implies an enterprise value for 3M’s Food Safety business of approximately US$5.3 billion, including US$1 billion in new debt to be incurred by 3M’s food safety business.
3M’s food safety business will provide 3M with a consideration valued at approximately US$1 billion, subject to closing and other adjustments. The combined company is however expected to have an enterprise value of approximately US$9.3 billion, based on NEOGEN’s closing share price as of December 13, 2021.
“We believe our Food Safety business will be well positioned with Neogen, and we are pleased to close the transaction.
“By building a global innovator in food safety, the business will bring customers a broader offering of technologies and solutions, while unlocking greater value for shareholders,” said Mike Roman, 3M Chairman and Chief Executive Officer.
3M is an American multinational conglomerate operating in the fields of industry, worker safety, U.S. health care, and consumer goods. The company produces over 60,000 products under several brands.