Neogen partners with 3M’s food safety business. Its stock is climbing.

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3M will receive a payment of approximately $ 1 billion. Photographer: Daniel Acker / Bloomberg

Actions of


Neogen

was spurred on by the news that the food and animal safety specialist is partnering with the food safety unit of


3M

in a deal that involves an enterprise value of $ 5.3 billion for the latter company, including debt.

The combined business will improve


Neogen

and is expected to have an enterprise value of approximately $ 9.3 billion. Neogen stock (ticker: NEOG) rose 11.5% to $ 44.70 in pre-market trading, while 3M (MMM) rose 0.5% to $ 175.4.

The expanded product line will allow Neogen to capitalize on its growing footprint, reaching more customers, more often, said John Adent, CEO of Neogen.

Neogen, based in Lansing, Michigan, develops test kits to detect harmful natural toxins, foodborne bacteria and general food hygiene levels. At the animal level, they manufacture consumable products marketed to veterinarians and distributors of animal health products.

The deal involves what a press release described as a “tax-free ‘Reverse Morris Trust’ transaction structure.” 3M, which will receive a payment of approximately $ 1 billion, will separate from the food safety business, allowing it to merge with a wholly owned subsidiary of Neogen. Neogen will then issue shares to 3M shareholders, giving them approximately 50.1% of the combined business. Neogen shareholders will own the remaining 49.9%, according to the press release.

Write to Karishma Vanjani at [email protected]

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