MINNEAPOLIS – 3M Co. (MMM), a manufacturer of products ranging from Post-it notes to weather-stripping, said Thursday it is selling its branded drug business for nearly $2.1 billion in three separate deals.
The company said the deals follow "a review of strategic options" for its drugmaking units worldwide. It said it expects the sale to close in the fourth quarter.
3M shares fell 67 cents to $78.75 in afternoon trading on the New York Stock Exchange.
Graceway Pharmaceuticals Inc. of Bristol, Tenn., will buy 3M's pharmaceutical operations in the United States, Canada and Latin America for $875 million.
The Swedish drugmaker Meda AB is buying its European pharmaceutical unit for $857 million, and an investment group led by Ironbridge Capital and Archer Capital have agreed to acquire its drug operations in the Asia Pacific region, Australia and South Africa for $349 million.
The businesses include the skin cancer treatment Aldara as well as the drugs Minitran, Difflam, Duromine and Tambocor.
"These are great brands and products, and we believe they will thrive in today's very competitive pharmaceutical marketplace under the direction of their new owners," Brad Sauer, executive vice president of 3M Health Care, said in a statement announcing the deals.
3M announced in April that it would try to sell the pharmaceutical unit, believing it would be worth more to a dedicated pharmaceutical company with the sales force to make it grow. 3M said then that pharmaceuticals are about 20 percent of its health care division, which saw sales grow 4.7 percent during the first nine months of this year, slower than any other 3M unit.
Prudential Equity Group analyst Nicholas P. Heymann wrote in a note that the pharmaceutical business had operating margins of about 30 percent. 3M's overall margin may drop as the company moves money from the sale into its other businesses with tighter margins, he wrote.
The division employs about 1,050 employees worldwide, including about 330 in the European division, according to Meda. 3M estimated that approximately 70 percent of those employees will be given a chance to stay with the acquiring companies.
Sweden's Meda said the acquisition of 3M's European unit will strengthen its product portfolio and add about $280 million in annual sales, pushing it toward a goal of becoming the leading specialty pharmaceutical company in Europe.
Archer Capital Investment Director Ben Frewin said they looked at several pharmaceutical companies over the past few years and bought 3M's because of its diverse, high-growth products, strong market positions and growing geographic reach.