3M to Divest Protective Films Business, Shares Falter

Abrasives manufacturer 3M Company recently inked a definitive agreement to divest its temporary protective films business to Pregis LLC, a leading global provider of innovative protective packaging materials, for an undisclosed amount. However, following the announcement, shares fell by approximately 2.5% to close at $175.64 as of Sep 9, 2016.

The held-for-sale business offers adhesive-backed temporary protective films for use in automotive, appliance, metalworking, building and construction industries. Despite annual global sales of approximately $50 million, 3M decided to divest the unit as it was deemed to be a non-core business in its strategic portfolio review. The company in turn decided to focus on core adhesives, sealants, and tapes businesses under its Industrial Adhesives and Tapes Division.

The transaction is expected to be completed by the year end, subject to mandatory closing conditions and regulatory approvals. About 90 employees of the divested entity are expected to join Pregis, following the completion of the sale procedure.

On its part, Pregis manufactures innovative protective packaging materials, equipment systems and surface protection solutions for diversified consumer and industrial market segments including food, beverage, healthcare, medical devices, agricultural, e-commerce, retail, automotive, furniture, electronics, metals, construction and military/aerospace. Consequently, the acquisition of 3M’s protective films business would enable it to extend its portfolio and augment its customer base by leveraging the R&D expertise and employee skill set of the industrial goods behemoth.

Maplewood, MN-based 3M employs 90,000 people worldwide, with operations in more than 65 countries. It manufactures over 55,000 products including adhesives, abrasives, laminates, passive fire protection, dental and orthodontic products, electronic materials, medical products, car-care products (sun films, polish, wax, car shampoo, treatment for the exterior, interior and the under chassis rust protection), electronic circuits, and optical films.

Portfolio management, investment in innovation and business transformation are the three key areas on which the company intends to focus, moving forward. 3M also intends to continue investing in capital expenditures and research and development to support organic growth as it aims at a prudent capital structure strategy and increased capital deployment.