Activist investor Nelson Peltz’s Trian Fund Management has acquired a stake in 3M Co.’s (NYSE:MMM) healthcare spinoff, Solventum Corp. (SOLV).
Trian is now among the largest shareholders in Solventum, which became an independent public company this year and has a market value of about $9.4 billion, a Trian representative confirmed in an emailed statement, confirming a report by Bloomberg News. The precise size of Trian’s stake remains undisclosed.
SOLV shares jumped 3.5% after the market open on Tuesday.
Trian has approached Solventum to discuss strategies for enhancing shareholder value, saying the healthcare firm should boost organic growth, improve margins, and consider asset sales to simplify its portfolio.
“Trian looks forward to engaging constructively with Solventum’s management and board,” the statement read.
“While investors have been contemplating when and what the company can either spin or sell to improve its WAMGR, mgmt has noted that its focus over the next 24 months is debt repayment,” analysts at Wells Fargo said in a note.
“We also note that any sale/spin could trigger a potential tax event. In addition, we see a multi-year turnaround ahead to address execution challenges and optimize the portfolio,” they added.
Trian believes its proposed changes will help the company reduce debt and potentially initiate a dividend, per Blomberg’s report.
“We are intently focused on executing our previously articulated strategy designed to accelerate revenue growth, drive margin expansion, improve free cash flow, and optimize the portfolio,” Solventum reportedly said in an email statement.
“We welcome shareholder feedback and look forward to engaging with Trian as we do with all of our shareholders," it added.
Since its spinoff, Solventum has lost nearly a third of its value, whereas former parent company 3M has seen its stock rise by more than 20% during the same period. Bloomberg data indicates that 3M retains a stake of close to 20% in Solventum.