The 3M Company
According to 3M, the new healthcare business will pivot to focus on "wound care, oral care, healthcare IT, and biopharma filtration." The "New 3M" will retain the company's traditional industrial scientific and manufacturing businesses. In terms of how those newly independent companies could perform; 3M's Health Care divisions made nearly $8.6 billion in non-GAAP earnings in 2021, while the divisions making up "New 3M" brought in $26.8 billion.
"Today's actions advance our ability to create value for customers and shareholders," said 3M CEO and Board Chairman Mike Roman. "Disciplined portfolio management is a hallmark of our growth strategy. Our management team and board continually evaluate the strategic options that will best drive long term sustainable growth and value. The decision to spin off our Health Care business will result in two well-capitalized, world-class companies, well positioned to pursue their respective priorities."
3M announced in a separate statement that it would be attempting to initiate Aearo Technologies into Chapter 11 proceedings. Aearo is infamous for the production of the Combat Arms Earplugs, which were standard issue in the US military for over a decade until contracts were cancelled due to complaints of being ineffective.
In 2016, a whistleblower lawsuit alleged that 3M had knowingly sold defective earplugs that did not adequately prevent hearing damage. Despite the case being settled out of court, countless lawsuits have been filed by military veterans with hearing damage resulting from defective 3M earplugs. In many of the early "test" cases tried so far, 3M has lost.
Veterans and lawyers representing them have alleged that the company is seeking to shield itself from steeper liabilities by shifting litigation into bankruptcy court. While 3M has set aside a $1 billion trust to handle compensation claims for hearing-damaged veterans, the estimated value of liabilities against Aearo Technologies is at least 10 to 30 times as much.
Many claims are registered against 3M itself, leaving the company potentially on the hook for compensating claimants even if courts allow bankruptcy proceedings to shield it from liability from cases against Aearo. Bankruptcy proceedings have prompted a brief three week pause in some litigation after a decision from a bankruptcy court, however, a Florida judge hearing cases against 3M has also commented that Aearo's bankruptcy more than likely doesn't freeze any litigation against 3M.
