Bloomberg – GE, 3M Spinoffs Join S&P 500, Divide Investors Over Valuation
Apr 3, 2024
By Bailey Lipschultz
(Bloomberg) --
Corporate breakups have come back in vogue,
but only one of the two blue-chip spinoffs joining the S&P 500
Index this week found favor with investors.
By contrast, though 3M’s separation of Solventum fueled
some optimism on Wall Street, analysts cited the unit’s heavy
debt load as a concern. Whatever gains were envisioned have gone
to the parent, which has climbed 7.1% from the open on March 26.
Jim Osman, founder of special situations research firm The
Edge Consulting Group, recommends clients wait to buy either
company.
GE Vernova is “at a fair valuation, suggesting the timing
for action might be more favorable down the line,” Osman said “Caution is key,” he said of Solventum, given its leverage
is higher than peers. The company has about $8 billion in debt,
and guided for organic revenue growth between minus 2% and zero
in 2024.