3M to divest branded pharmaceuticals business for $2.1 billion

3M entered into agreements with several companies to sell its global branded pharmaceuticals business for about $2.1 billion. The divestment is the result of 3M's previously announced strategic review of operations.

In a statement, 3M indicated Thursday that its branded drugs business in the US, Canada and Latin America is being acquired by Graceway Pharmaceuticals for $875 million. Sweden's Meda AB will pay $857 million to buy 3M's European pharmaceutical operations. Additionally, two private equity firms, Ironbridge Capital and Archer Capital, will purchase the company's pharmaceutical business in the Asia Pacific region for $349 million. Under the terms of the deals, 3M indicated that the purchasers will acquire regional marketing rights to its drugs including Aldara, approved to treat skin cancer and genital warts as well as anti-arrhythmia drug Tambocor.

Commenting on the news, Greenwich Consultants analyst Michael Judd explained that "it's an issue about the cost of developing new drugs. Sometimes it's better to sell something where you don't have high margins and return those proceeds to shareholders or reinvest in other businesses," Bloomberg reports.

3M anticipates that the transactions will close in the fourth quarter.

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