NEOGEN CORPORATION completes merger with 3M’s Food Safety business

September 2, 2022

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NEOGEN($NASDAQ:NEOG) Corporation , a leading supplier of food and animal safety products, announced today that it has completed its merger with 3M’s Food Safety business. The deal, which was first announced in late 2021, creates a combined entity with an enterprise value of approximately $9.3 billion. NEOG shareholders will own approximately 49% of the combined company, with the remaining shares held by 3M shareholders. The merger is expected to be accretive to NEOG’s earnings in the first full year after closing, and to generate significant cost synergies over time. NEOG expects the transaction to be slightly dilutive to its adjusted earnings per share in 2022, due to one-time costs associated with the merger. Looking ahead, NEOG remains committed to delivering strong financial results and creating shareholder value. The company is confident that the combination of its leading market position and 3M’s Food Safety business will create a platform for long-term growth and profitability.

Market Price

NEOGEN Corporation stock opened at $20.2 and closed at $19.0 on the news. NEOGEN Corporation is now a leading provider of food safety solutions with a broad range of products and services.

VI Analysis

NEOGEN CORPORATION is a strong company in terms of its asset and profitability. However, it is only medium in terms of growth. The company’s dividend is weak. NEOGEN CORPORATION has a high health score of 8/10 with regard to its cashflows and debt, is capable to safely ride out any crisis without the risk of bankruptcy. NEOGEN CORPORATION is classified as ‘rhino’, a type of company that has achieved moderate revenue or earnings growth. Due to its moderate growth rate, such company is deemed less risky and volatile as it pursuits a sustainable growth rate.

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NEOGEN will now offer an even broader range of solutions to help customers improve food safety and quality. “The completion of this merger is a significant milestone for NEOGEN,” said NEOGEN CEO Jim Herbert. “The combination of our two companies creates a food safety powerhouse that is unrivaled in the marketplace. The business includes 3M’s Food Safety portfolio of products, services and technology solutions. The acquisition strengthens NEOGEN’s position as a leading provider of food safety solutions, complementing its existing portfolio of products and services. NEOGEN now offers an even broader range of solutions to help customers improve food safety and quality. Despite the news, NEOGEN’s stock price moved down the same day. Some investors may be concerned about the company’s debt load following the merger. Others may believe that the stock is overvalued at current levels.

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