3M to sell its pharmaceuticals business

3M has entered into agreements to sell its global branded pharmaceuticals business for approximately US$2.1bn.

Tennessee-based Graceway Pharmaceuticals has agreed to acquire 3M's pharmaceutical operations in the US, Canada, and Latin America region for $875m. European speciality pharma company Meda is buying the business in Europe for $857m; the agreement will be implemented by each 3M subsidiary subject to compliance with third party notice and approval requirements. Australian private equity provider Ironbridge Capital and management buyout specialistArcher Capital will acquire the operations in the Asia Pacific region, including Australia and South Africa for $349m.

The agreements are the result of a review of strategic options for the branded pharmaceuticals business and its immune response modifier (IRM) platform that 3M announced in April. Under the agreements, the purchasers will acquire regional marketing and intellectual property rights for 3M's branded pharmaceuticals, including Aldara, Difflam, Duromine, Tambocor, Maxair, Metrogel-Vaginal and Minitran.

3M's drug delivery systems division will be a source of supply to the acquiring companies for the products. As part of the transaction, Graceway Pharmaceuticals will also acquire the rights to certain IRM molecules.

There are approximately 1,050 employees in 3M's pharmaceuticals division worldwide. It is estimated that approximately 70% will receive employment opportunities with the acquiring companies.

The transactions are scheduled to close in the fourth quarter, subject to customary closing conditions, including regulatory approvals, and in the case of Graceway Pharmaceuticals, and Ironbridge Capital and Archer Capital, the receipt of financing.