Corning has agreed to acquire substantially all of 3M’s Communication Markets division for $900 million to expand its portfolio of high-bandwidth optical communications products.
The 3M unit generates about $400 million a year in sales but apparently is no longer seen as a core business. 3M, the maker of Scotch tape, Post-it notes, respirators and hearing protection headsets, has been divesting businesses that no longer have the potential to boost margins or markets.
“After completing a thorough strategic review, we believe that this business will be well positioned with Corning,” Ashish Khandpur, executive vice president of 3M’s Electronics & Energy Business Group, said in a news release.
As part of its multi-year Strategy and Capital Allocation Framework, Corning is planning to invest approximately $1 billion to $3 billion in acquisitions. The 3M unit will become part of its optical communications business, which accounted for more than a third of its sales in the third quarter.
Corning said the acquisition will add to its array of high-bandwidth optical connectors, assemblies, hardware, and accessories for carrier networks, enterprise LAN, and data center solutions. About 500 3M employees will join Corning as part of the deal.
“This transaction expands both our global market reach and our high-bandwidth portfolio. It also provides new co-innovation opportunities and enhances our ability to serve customers globally,” said Clark S. Kinlin, executive vice president of Corning Optical Communications.
“As the industry’s only true end-to-end manufacturer and supplier of optical solutions, we look forward to bringing these two strong organizations together and welcoming a group of outstanding employees,” he added.
3M’s other recent divestments include the sale of its prisoner electronic-monitoring business to the private equity advisory firm Apax Partners for $200 million and the sale of its identity management business to Dutch company Gemalto for $850 million.
In the past two years, it has also sold its its pressurized foam adhesives business, its French license plate making business, and its library systems unit.