3M to Buy M*Modal’s Technology Business

On December 19, 3M (MMM) stated that it has entered into a definitive agreement with M*Modal to acquire its technology business for an enterprise value of $1.0 billion. The effective enterprise value is 10x the estimated EBITDA for the first 12 months after the acquisition is complete, including synergies.

3M expects the transaction to be completed by the first half of 2019. 3M expects the acquisition to be $0.10 dilutive to its earnings on a GAAP basis. The acquisition will complement 3M’s Health Information Systems Business. M*Modal’s technology business is estimated to generate annual revenues of $200 million.

Mike Vale, 3M’s executive vice president of the Health Care Business Group, said, “This acquisition builds on our strategic commitment to invest in our Health Information Systems business and expands the capabilities of our revenue cycle management and population health priority growth platform. Together, we will enable doctors to improve the patient experience, while enhancing documentation accuracy and operational efficiency for both providers and payers.”

The decline in the markets on December 19 pushed 3M stock into the red. 3M fell ~2.4% and closed at $189.96. Honeywell (HON) and Boeing (BA) declined 1.4% and 2.6%, respectively, while General Electric (GE) gained 5.36%. At the same time, the S&P 500 (SPY) decreased 1.54%.