Investors are eagerly awaiting the upcoming launch of 3M’s (NYSE:MMM) healthcare spinoff, Solventum. What does it mean for 3M stock?
Well, investors aren’t quite so sure. Some believe it may be worth buying up 3M shares ahead of the Solventum launch, arguing the spinoff may prove bullish for its parent company.
Others think it may be prudent to wait for the spinoff on April 1 — and any corresponding carnage to 3M stock — before buying into the industrial company.
As it stands, if you want to get into Solventum via 3M’s share distribution, it’s probably too late. The record date to get one share of Solventum for every four shares of 3M was March 18.
Ahead of the launch, 3M has regained quite a bit of popularity. Indeed, MMM stock is up 16.7% over the past month. That said, the stock is still in the red 2.3% year to date, while the S&P 500 is up more than 10% over the same period.
7 Things to Know About the Solventum Spinoff
- As mentioned, Solventum will represent a branch-out of 3M’s healthcare business, it’s fastest growing division.
- Solventum will debut on the New York Stock Exchange under the SOLV ticker on April 1.
- 3M is notoriously generous with dividend payment and share repurchases. In 2023, the company paid $3.32 billion in dividends, and $33 million in buybacks.
- Spinoffs haven’t exactly had the best track record lately. Johnson & Johnson’s (NYSE:JNJ) consumer health branch, Kenvue (NYSE:KVUE), has lost more than 20% of its value since it spun off last year.
- 3M stock may also take a tumble following the launch of Solventum as investors who want to own the spinoff via share distribution sell off their MMM stock holdings.
- Some suspect 3M may reset its high-yield dividend after launching Solventum, which contributed a significant amount to its revenue and earnings. This is another common move for spinoffs.
- Earlier this month, 3M appointed a new chief executive, William Brown, former chairman and CEO of defense contractor L3Harris Technologies (NYSE:LHX). Brown will start his new role on May 1.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
