Neogen, 3M announce blockbuster merger to create ‘global leader’ in food safety
Lansing-based food and animal safety products manufacturer Neogen Corp. plans to combine with conglomerate 3M’s food safety business.
The two companies say they signed a definitive agreement for a deal to create a new global food safety and security company valued at $9.3 billion. Shareholders at Neogen (Nasdaq: NEOG) would hold about 49.9 percent of the combined company. Shareholders 3M (NYSE: MMM), which is spinning off its food safety business, would get approximately 50.1 percent.
The deal could close by the end of the third quarter in 2022, pending approval by regulators and Neogen shareholders.
Neogen President and CEO John Adent and the company’s existing management team would run the combined company, which would retain a global headquarters in Lansing “with a strong local presence,” he said. The combined company would have revenues approaching $1 billion with $300 million in adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization).
The combined company would put Neogen “at the forefront of the new era in food security with the resources, capabilities and solutions to be a global food security provider,” Adent said in a Tuesday conference call with brokerage analysts to discuss the deal.
“At a time where we’re seeing robust growth trends in sustainability, food security and the heightened focus on supply chain integrity, we are right there in the center, ensuring the global food supply remains safe and robust,” he said. “This combination will help us do an even better job to capitalize on these long-term tailwinds, creating a global leader in food security and establishing a platform from which we are well positioned to accelerate growth and drive significant additional value for customers, employees and shareholders.”
Both Neogen and 3M “serve large, attractive and growing categories,” Adent said.
The food safety market has a value of $18 billion to $25 billion with a long-term growth rate of 6 percent to 8 percent, he said. The animal safety market has a value of $50 billion to $60 billion with a long-term growth rate between 4 percent and 6 percent, Adent told analysts.
Centerview Partners LLC serves as financial adviser and Weil, Gotshal & Manges LLP as legal counsel to Neogen. Goldman Sachs & Co. LLC serves as financial adviser and Wachtell, Lipton, Rosen & Katz as legal counsel to 3M. Goldman Sachs Bank USA and JP Morgan Securities will provide committed financing for the transaction.
“Neogen and 3M share a deep commitment to quality, innovation and customer satisfaction and long histories of industry leadership,” 3M Chairman and CEO Mike Roman said in a statement. “By combining our Food Safety business with Neogen, we will create an organization well positioned to capture long-term profitable growth. This transaction further evolves our strategy, focuses our health care business and benefits our stakeholders, as we actively manage our portfolio to drive growth and deliver shareholder value.”
Leave a Comment