3M Company (MMM) stated its intention to acquire Cognet Inc, makers of finger and palm print readers, in an all-cash deal worth $943 million. The target company also manufactures eye and face recognition devices utilized by various security agencies.
3M has offered to pay $10.50 per share, nearly 18% above Cogent’s closing price on Friday last. The board of directors of Cogent has recommended this transaction to shareholders for their acceptance.
This acquisition is expected to complement 3M’s existing business of manufacturing border-management products like document readers and laminates, which are utilized to issue passports and visas.
The acquisition is expected to close by the end of the calendar year and will result in charges for 3M of approximately 10 cents per share in the succeeding twelve months.
The 3M brand is recognized and trusted around the world. Household names like Nexcare, Post-it, Scotch, Scotch-Brite, and Scotchgard are market leaders. This has led to strong brand recognition across the globe.
We believe that continued capital expenditure with new product launches and increased focus on emerging markets like China, India, etc. should bolster its prospects across most end markets.
The danger on the economic front is deceptive due to the potential illusion of falling unemployment rates, which might occur only because people are utilizing unemployment benefits at a higher rate than new entrants joining the unemployment roles. So, while the company might have traversed the worst of the tempest, it is still sailing in choppy waters.
3M Company, together with its subsidiaries, operates as a diversified technology company with manufacturing operations spread over 60 countries worldwide. It has more than 35 business units organized into six segments: Consumer and Office, Display and Graphics, Electro and Communications, Healthcare, Industrial and Transportation, Safety, Security and Protection Services Business.
We currently have a Neutral recommendation on 3M Company.
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