What Happened at 3M?

In a recent article, we looked at the concept of “stock splits;” what they are and why they happen. This month, with 3M in the news, we decided it might be a good opportunity to discuss another stock split of sorts – a company “spinoff.” 

On March 18th, 3M finalized the spinoff of its internal healthcare division to create a new, publicly traded, healthcare company – Solventum. For our clients who own 3M stock, this spinoff works in much the same way as a traditional stock split. If you went to bed before the split with 4 shares of 3M stock, you woke up with 4 shares of 3M stock and 1 share of Solventum.  

However, while you may have added more shares overnight, the total value of those shares (more or less) stayed the same. In my last article on stock splits, I used the analogy of cutting a pizza – “you're not creating more pizza by cutting it, just dividing it into smaller slices.” To take this original analogy a bit further, a spinoff is more like picking the toppings off of a pizza to benefit two picky eaters – one person gets to eat all the toppings they like, while the other gets a plain cheese pizza. Both people can benefit from the arrangement, but the amount of food stays the same. 

Only time will tell whether this most recent spinoff will result in greater benefits to both Solventum and 3M. For our part, we will continue to watch both companies closely for all of our 3M owning clients.

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