3M’s Biggest Deal Could Turn Out to Be a Badly Timed Distraction

Industrial conglomerate 3M Co. agreed in May to acquire surgical wound-care company Acelity Inc. for $6.7 billion in a deal set to close later this year. By far the biggest purchase in 3M’s 117‑year history, it comes at a time when the company is at a crossroads. Long regarded as a reliable operator that could offer haven to investors during times of economic strife, it’s announced a string of earnings and sales guidance cuts over the past year, including one just weeks before the Acelity acquisition was unveiled.

3M admitted to operational missteps that exacerbated the earnings pressure from slumping demand in China and weak automotive and electronics markets. And although the company spends a higher percentage of its revenue on research and development than most peers, it hasn’t had much to show for it lately. The Acelity takeover signals a new—but risky—strategy by 3M to buy its way to better growth.