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The deal is expected to close by the end of 2023.

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3M Inc. plans to expand its healthcare business by the end of 2023 by splitting it from its materials science products, the company announced Tuesday.

The standalone company will include 3M’s wound care, dental, health IT and biopharma filtration products. The segment brought in about $8.61 billion in revenue last year. 3M plans to maintain a 19.9% ​​stake in the company.

CEO Mike Roman said in a news release that the decision “aligns two well-capitalized, world-class companies to achieve their respective priorities.”

Each company will have its own boards and management teams, although 3M has not yet said who will lead the healthcare spinoff.

“We look at where to invest in our portfolio, where acquisitions make sense and how we get the most value out of it, and that’s ultimately what was behind our decision to spin off Health Care,” Roman said on Tuesday’s investor call. . “We have invested in strategies to create a stronger healthcare company. It is well positioned to succeed as an independent company and have a great future, which is what drove this decision.’

The deal is expected to be tax-free and is expected to close late next year, subject to approval by the company’s board of directors and a filing with the Securities and Exchange Commission. 3M is also expanding its food safety business in a separate transaction that will close in September 2022.

3M joins several other large medtech companies that have turned to spinoffs as a strategy. Earlier this year, Zimmer Biomet incorporated its spine and dental businesses into ZimVie, and Johnson & Johnson plans to spin off its consumer healthcare group and is preparing to spin off the GE healthcare unit in early 2023.

Shares of 3M closed at $140.75 on Tuesday, up $6.63, on the New York Stock Exchange.

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