Spinoff spotlight

Article Excerpt

3M COMPANY $176 is a buy. The company (New York symbol MMM; Manufacturing sector; Shares outstanding: 576.3 million; Market cap: $101.4 billion; Dividend yield: 3.4%; Takeover Target Rating: Medium; www.3m.com) produces more than 60,000 items, including air purifiers, adhesives, bandages and components for medical devices. The company is now merging its Food Safety business with Neogen Corp. (Nasdaq symbol NEOG). 3M investors will hold 50.1% of the combined firm, with Neogen shareholders owning the remaining 49.9%. The companies will complete the merger under a Reverse Morris Trust structure, so investors will not be liable for capital gains taxes until they sell their new shares. 3M will also receive a cash payment of $1.0 billion when the deal closes in the third quarter of 2022. The agreement helps unlock some of 3M’s “holding company discount.” The cash payment will also give it more room to increase its dividend; the current annual rate of $5.92 a share yields 3.4%. 3M is a buy. buy…