3M Commences Split-Off Exchange Offer for Food Safety Business

[misanman]

We are holders of 3M stock and I recently became aware of a tender offer related to the spin off of their food safety business (SpinCo). Details may be found at:

https://investors.3m.com/news/news-details/2022/3M-Commences-Split-Off-Exchange-Offer-for-Food-Safety-Business/default.aspx

It's not clear to me if it's worthwhile to tender our shares or not. I'm guessing there are other 3M stockholders out there that have already considered this question. What do you think?

Shares must be tendered by the end of August.

 

[NgineER]

We are holders of 3M stock and I recently became aware of a tender offer related to the spin off of their food safety business (SpinCo). Details may be found at:

https://investors.3m.com/news/news-details/2022/3M-Commences-Split-Off-Exchange-Offer-for-Food-Safety-Business/default.aspx

It's not clear to me if it's worthwhile to tender our shares or not. I'm guessing there are other 3M stockholders out there that have already considered this question. What do you think?

Shares must be tendered by the end of August.

In the same boat - don't know enough about Neogen to see if it would be worthwhile to tender or not. Anyone with more insights would be welcome to add their comments.

 

[all4j]

Don't know that I qualify as having more insight, but here's $0.02.

These are 2 very different companies & so will appeal to different objectives. I'd classify neog as small cap growth. It hasn't been paying a dividend which is why many own mmm. NEOG has had strong growth in the past & may likely continue that trend. I'd expect it will be much more volatile though. As might be expected, the market will give different valuations for companies this different.

There are some concerned with MMM's pending litigation. Other spinoffs are coming. So, change at MMM is inevitable.

A couple of things to remember. You can buy NEOG now or after the transition if the company appeals to you. Since MMM will own 50.1% of NEOG, you will have some exposure anyway. The upper limit on exchange ratio looks as if it will be in effect; meaning you won't get the full "premium" mentioned as a sweetener if you exchange your shares.

Looking forward to more discussion & different perspectives

 

[pacergal]

We also have 3M
As all4j says, 3M will still own some of the new company.
So we chose not to exchange and hold on to our 3M.

 

[ownyourfuture]

ATTN OP: Thanks for posting this. I just checked my messages at Fidelity. Wasn't notified until early in the a.m. on August 23rd. Never received anything through the regular mail. Did anyone else ?

I haven't had good luck with spinoffs. The most recent was from Realty Income
Orion Office REIT Inc. (ONL) a dog with all kinds of fleas.

The previous was Eli Lilly spinning off Elanco Animal Health Incorporated (ELAN) around this time in 2018. Thank God I didn't participate in that one.
LLY is up 200% percent since, while Elanco has cratered.

 

[gcgang]

https://investors.3m.com/news/news-...e-Offer-for-Food-Safety-Business/default.aspx

All other things being equal, shouldn’t you tender to get the spin-off shares at a 7% discount?

Are there going to be three different companies when this is over?

If you don’t tender, will you end up with two stocks, or just one?

I’ll dig back in to see if I can understand it better, but appreciate the feedback here.

 

[gauss]

If the 3M shares are "non-covered" (ie brokerage is not required to report basis to IRS) and not within a retirement account, then calculating the basis of the spin/split offs can have the possibility to get complicated.

My late DMIL had some old ESOP shares from her employer that had split off companies that begat other split off companies and so on. Just something to be aware of if you are on the fence.

-gauss

 

[all4j]

https://investors.3m.com/news/news-...e-Offer-for-Food-Safety-Business/default.aspx

All other things being equal, shouldn’t you tender to get the spin-off shares at a 7% discount?

Are there going to be three different companies when this is over?

If you don’t tender, will you end up with two stocks, or just one?

I’ll dig back in to see if I can understand it better, but appreciate the feedback here.

There are & will be 2 companies. Neogen exists today & you can buy their shares. 3M will split off some of its company that will merge into Neogen; 3m will own 50.1% of Neogen. You can tender some, but not all of your shares. There is a technical possibility that if not enough 3m shares are tendered, then existing 3m shareholders will have some Neogen distributed to them (in which case you'd have shares of 2 companies).

I had expected someone to raise the issue of getting the "7% discount". Since these are existing companies, I would expect there may also be some arbitrage opportunity using call/put options somehow. However, there is risk involved.

Currently, based on stock price of the 2 companies, the sweetener won't be as high. There has been a large short position in Neogen. Short position stats can be stale & so I hesitate to say it still is. That might lead to a short squeeze driving the price up; or it could be the 'shorts' are right & the price will fall quickly.

So, if you are tendering for a trade, be ready to be nimble. If a long term investment? Neogen may indeed be a good long term investment, but it will be quite different from 3m (See earlier post on dividend).

 

[ownyourfuture]

In case anyone is unsure about this deal.
From Fidelity:

Next steps

Provide instructions now
You haven't participated, but you can still participate anytime before Aug 30, 2022 7:00 PM ET by calling 800-544-8666.

Disregard this offer
If you read and understood the offer and have decided not to provide instructions, you don't need to do anything else.

 

[clifp]

Damn, I wish I had checked the board before sending in my instruction.

Trying to evaluate a new food company, with so little information, fell into the too-hard category. I elected to just keep my MMM shares.

 

[sengsational]

When I've not been patient enough to dig through the details of a deal like this, I look on seeking alpha. There's usually a some discussion of the advantages and disadvantages and possibly some predictions.

 

[gauss]

Damn, I wish I had checked the board before sending in my instruction.

Trying to evaluate a new food company, with so little information, fell into the too-hard category. I elected to just keep my MMM shares.

Are you able to revise your submission as long as it goes in before the cutoff date?

-gauss

 

[Montecfo]

I owned it for years and made good money but sold quite a few ago. I recently looked at the stock thinking the split might be a catalyst but it does not seem promising enough to merit investment at this point.