3M To Divest Communication Markets Business For $900 Million
Zacks Investment Research | Dec 11, 2017 08:43PM ET
3M Company (NYSE:MMM) recently inked a definitive agreement with Corning Incorporated (NYSE:GLW) to divest its Communication Markets business for $900 million. Corning is a premier manufacturer of glass, ceramics, and related materials for industrial and scientific applications. The transaction is expected to be completed in 2018, subject to mandatory closing conditions and regulatory approvals.
The held-for-sale business is part of 3M’s Electronics and Energy segment and offers a wide array of optical fiber and copper passive connectivity solutions for the telecommunications industry. These include closures, connectors, splices, modular cabinets and structured cabling systems for copper fiber optic networks and wireless media. The business employs approximately 500 employees and generates annual global sales to the tune of $400 million. Post divesture, these employees will be absorbed by Corning Incorporated. 3M expects to realize a gain of approximately 40 cents per share from the deal.
3M decided to divest the business to focus on its core businesses. Over the years, the diversified industrial goods manufacturer has continuously pruned its businesses to improve customer relevance, productivity and speed through a leaner operating structure. At the same time, 3M has maintained a steady investment in R&D to develop innovative products.
3M expects to deliver sustainable increase in earnings and free cash flow, benefiting from its long-term strategy of accelerating investment in high-growth programs. The company’s ability to convert high R&D spends into up-cycle market share gains and strong pricing powers determine its success. Organic growth remains the first priority of the company as it continues to invest in infrastructure and commercialization capability. With a diligent execution of operational plans, 3M has outperformed the Zacks Investment Research
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