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Acquisition Expands Presence in Advanced and Surgical Wound Care

ST. PAUL, Minn.–(BUSINESS WIRE)–3M (NYSE: MMM) today announced that it has entered into a definitive
agreement to acquire Acelity Inc. and its KCI subsidiaries worldwide
from a consortium comprised of funds advised by Apax Partners (the Apax
Funds), together with controlled affiliates of Canada Pension Plan
Investment Board (CPPIB) and the Public Sector Pension Investment Board
(PSP Investments) for a total enterprise value of approximately $6.7
billion, including assumption of debt, subject to closing and other
adjustments. Acelity is a leading global medical technology company
focused on advanced wound care and specialty surgical applications
marketed under the KCI brand. 3M will conduct an investor
teleconference at 8:30 a.m. EDT today
to discuss how the acquisition
is expected to expand its presence in advanced and surgical wound care.

“Acelity is a recognized leading provider of advanced wound care
technologies and solutions and an excellent complement to our Health
Care business,” said Mike Roman, 3M chief executive officer. “This
acquisition bolsters our Medical Solutions business and supports our
growth strategy to offer comprehensive advanced and surgical wound care
solutions to improve outcomes and enhance the patient and provider
experience.

“We are excited to bring Acelity’s technologies and dedicated employees
to our team,” Roman continued. “Together, we will apply 3M science to
bring differentiated offerings to key wound and operative care solutions
worldwide.”

The Acelity business is well known for creating and growing new segments
based on the ability to identify and address unmet clinical needs with
KCI-branded products that advance the practice of medicine, beginning
with the introduction of V.A.C.® Therapy – groundbreaking Negative
Pressure Wound Therapy. Today, the KCI product offering also includes
advanced wound dressings and negative pressure surgical incision
management systems. KCI’s solutions contribute to better health outcomes
by enhancing wound healing. Acelity had 2018 revenues of $1.5 billion.

3M’s Medical Solutions business is focused on applying 3M science
to deliver safe and effective solutions that improve clinical outcomes
and healthcare economics. 3M Medical Solutions offers a range of
integrated products that include medical tapes, advanced and acute wound
care dressings and products, sterilization products, and patient warming
products that get deployed in impactful solutions. These solutions cross
the entire continuum of care, enabling better outcomes, improving the
patient experience, and delivering strong economic value in today’s
value-based care environment.

On a GAAP reported basis, 3M estimates the acquisition to be $0.35
dilutive to earnings per share in the first 12 months following
completion of the transaction, including financing costs. Excluding
purchase accounting adjustments and anticipated one-time expenses
related to the transaction and integration, 3M estimates the acquisition
to be $0.25 accretive to earnings per share over the same period.

The effective enterprise value multiple is approximately 11 times
estimated annual adjusted EBITDA for the first 12 months following
completion of the transaction, including expected run rate cost
synergies.

As a result of this announcement, 3M now expects full-year 2019 share
repurchases to be in the range of $1.0 billion to $1.5 billion versus
$2.0 billion to $4.0 billion previously.

The transaction is expected to close in the second half of 2019, subject
to customary closing conditions and regulatory approvals. 3M will
finance the transaction with a combination of available cash and
proceeds from the issuance of new debt.

Credit Suisse acted as financial advisor to 3M. Cleary Gottlieb Steen &
Hamilton LLP acted as legal counsel to 3M.

V.A.C.® Therapy is a registered trademark of KCI.

3M will conduct an investor teleconference at 8:30 a.m. EDT (7:30 a.m.
CDT) today. Investors can access this conference via the following:

  • Live webcast at http://investors.3M.com.
  • Live telephone:
    Call 800-762-2596 within the U.S. or +1
    212-231-2916 outside the U.S. Please join the call at least 10 minutes
    before the start time.
  • Webcast replay:
    Go to 3M’s Investor Relations website at http://investors.3M.com
    and click on “Quarterly Earnings.”
  • Telephone replay:
    Call 800-633-8284 within the U.S. or +1
    402-977-9140 outside the U.S. (for both U.S. and outside the U.S., the
    access code is 21923086). The telephone replay will be available until
    11:30 a.m. EDT (10:30 a.m. CDT) on May 7, 2019.

Forward-Looking Statements
This news release contains
forward-looking information about 3M’s financial results and estimates
and business prospects that involve substantial risks and uncertainties.
You can identify these statements by the use of words such as
“anticipate,” “estimate,” “expect,” “aim,” “project,” “intend,” “plan,”
“believe,” “will,” “should,” “could,” “target,” “forecast” and other
words and terms of similar meaning in connection with any discussion of
future operating or financial performance or business plans or
prospects. Among the factors that could cause actual results to differ
materially are the following: risks associated with the contemplated
transactions generally, such as the inability to obtain, delays in
obtaining, or the imposition of burdensome conditions imposed in
connection with obtaining, required approvals under applicable antitrust
legislation and other regulatory and third party consents and approvals;
the occurrence of any event, change or other circumstances that could
give rise to the termination of the purchase agreement; the outcome of
any legal proceedings that may be instituted following announcement of
the contemplated transactions; potential severe volatility in the
capital markets and the impact on the cost to 3M to obtain debt
financing as may be necessary to consummate the transactions; failure to
retain key management and employees of Acelity and its subsidiaries;
issues or delays in the successful integration of Acelity’s operations
with those of 3M, including incurring or experiencing unanticipated
costs and/or delays or difficulties, which could result in additional
demands on 3M’s resources, systems, procedures and controls, disruption
of its ongoing business and diversion of management’s attention from
other business concerns; difficulties or delays in the successful
transition from the information technology systems of Acelity to those
of 3M as well as risks associated with other integration or transition
of the operations, systems and personnel of Acelity; failure or
inability to implement growth strategies in a timely manner; unfavorable
reactions to the contemplated transactions from customers, competitors,
suppliers and employees; the possibility that certain assumptions with
respect to Acelity’s business or the contemplated transactions could
prove to be inaccurate; worldwide economic, political, regulatory,
capital markets, and other external conditions and other factors beyond
3M’s control, including natural and other disasters or climate change
affecting the operations of 3M or its customers and suppliers; 3M’s
credit ratings and its cost of capital; changes in tax and other laws,
regulations, rates and policies; competitive conditions and customer
preferences; foreign currency exchange rates and fluctuations in those
rates; the timing and market acceptance of new product offerings; the
availability and cost of purchased components, compounds, raw materials
and energy (including oil and natural gas and their derivatives) due to
shortages, increased demand or supply interruptions (including those
caused by natural and other disasters and other events); the impact of
acquisitions, strategic alliances, divestitures, and other unusual
events resulting from portfolio management actions and other evolving
business strategies, and possible organizational restructuring;
operational execution, including scenarios where 3M generates fewer
productivity improvements than estimated; unanticipated problems or
delays with the phased implementation of a global enterprise resource
planning (ERP) system, or security breaches and other disruptions to
3M’s information technology infrastructure; financial market risks that
may affect 3M’s funding obligations under defined benefit pension and
postretirement plans; and legal proceedings, including significant
developments that could occur in the legal and regulatory proceedings
described in 3M’s Annual Report on Form 10-K for the year ended Dec. 31,
2018, and any subsequent quarterly reports on Form 10-Q (the “Reports”).
Changes in such assumptions or factors could produce significantly
different results. A further description of these factors is located in
the Reports under “Cautionary Note Concerning Factors That May Affect
Future Results” and “Risk Factors” in Part I, Items 1 and 1A (Annual
Report) and in Part I, Item 2 and Part II, Item 1A (Quarterly Reports).
The information contained in this news release is as of the date
indicated. 3M assumes no obligation to update any forward-looking
statements contained in this news release as a result of new information
or future events or developments.

About 3M
At 3M, we apply science in collaborative ways to
improve lives daily. With $33 billion in sales, our 93,000 employees
connect with customers all around the world. Learn more about 3M’s
creative solutions to the world’s problems at www.3M.com
or on Twitter @3M or @3MNews.

Contacts

3M Investor Contacts:
Bruce Jermeland, 651-733-1807
or
Tony
Riter, 651-733-1141

3M Media Contact:
Donna Fleming Runyon, 651-736-7646