Solventum Corp (SOLV)

[Porgie Tirebiter]

All of a sudden, I own shares of SOLV! I guess I should have been paying more attention to 3M.

I've had 3M for years and years, just collecting the dividend and probably not paying enough attention to it!

[DewDiligence]

SOLV begins trading on NYSE following completion of spinoff from 3M:

https://finance.yahoo.com/news/solventum-begins-trading-york-stock-103000676.html

[DewDiligence]

SOLV Investor Day CC slides:

https://d1io3yog0oux5.cloudfront.net/_7984eceea22d0dd69e55aae6e648ee7c/3m/db/3194/30840/presentation/Solventum+Investor+Day+3.19.2024.pdf

[DewDiligence]

SOLV issues 2024 guidance:

https://finance.yahoo.com/news/solventum-hosts-inaugural-investor-day-103000871.html

• Organic revenue growth of -2% to 0%

• Adjusted earnings per share (EPS) of $6.10 to $6.40

• Free cash flow of $700M to $800M

[DewDiligence]

Details of 3M’s SOLV spinoff finalized:

https://finance.yahoo.com/news/3m-board-directors-approves-spin-165500127.html

3M shareholders of record on 3/18/24 will receive 1 share of SOLV for every 4 shares of 3M. The SOLV shares will be distributed before the market open on 4/1/24.

This is a tax-exempt distribution for US residents.

[DewDiligence]

SOLV sells $6.9B of debt in six tranches:

• $1B of 3yr notes @5.45%

• $1.5B of 5yr notes @5.40%

• $1B of 7yr notes @5.45%

• $1.65B of 10yr notes @5.60%

• $1.25B of 30yr notes @5.90%

• $0.5B of 40yr notes @6.00%

The total debt issuance was supposed to $8.4B (according to 3M's recent webcast), but I don't know where the other $1.5B is coming from.

All but $600M of the proceeds will be paid to 3M as consideration for the spin-off of 3M’s healthcare business to SOLV.

[DewDiligence]

SOLV is holding an Investor Day webcast 3/19/24 at 9am ET.

[DewDiligence]

These are the five focal areas for 3M’s healthcare business that will become part of Solventum; they comprise about 25% of 3M’s current company-wide sales:

https://engage.3m.com/purification

https://www.3m.com/3M/en_US/health-information-systems-us/

https://www.3m.com/3M/en_US/medical-us/ (surgical supplies and wound care)

https://www.3m.com/3M/en_US/medical-device-components-us/ (components for other companies’ medical devices)

https://www.3m.com/3M/en_US/oral-care-us/ (dentistry and othodontics)

[DewDiligence]

Further details of 3M/SOLV capitalization:

SOLV will sell $8.4B of new debt, keeping $600M of the proceeds and paying $7.7B as a one-time (tax-free) dividend to 3M. (~$100M of the debt proceeds will go to underwriting fees.)

After the debt issuance and one-time payment to 3M, SOLV will have a debt/EBITDA ratio of ~3.5.

[DewDiligence]

3M sets 4/1/24 date for Solventum spin-off:

https://d1io3yog0oux5.cloudfront.net/_28c5051c41e86ce7771a2dfe11a5ee94/3m/news/2024-02-21_3M_Announces_Filing_of_Form_10_Registration_1826.pdf