In roughly the past six years, 3M completed 60 to 70 acquisitions, according to CFO David Meline. But many of them were very small and in geographical areas that were, in some cases, difficult for the company to leverage globally as far as execution, he says. This realization has led the diversified manufacturer to reconsider its acquisition strategy.
In the future, Meline says analysts can expect slightly bigger acquisitions than in the past five to six years. He says future acquisitions are likely to be more scalable on a global or at least regional basis. “And if there is a technology as part of it, that will be very, very interesting.”
Meline says Ceradyne, which 3M agreed to acquire in October 2012, is a good example of this shift in focus. The combination of Ceradyne and 3M is expected to enable new technologies and innovation for uniquely tailored materials requiring advanced ceramics, according to a press release.
Ceradyne’s business front end was good, Meline says, but benefits from the company’s acquired technology shouldn’t be overlooked. “The technology piece of it will really be good because that’s what we’re all about, so we can leverage around many, many divisions in the company due to the fantastic vertical integrated model we have both in research and development and manufacturing.”
President and CEO Inge Thulin says 13 to 15 divisions should be able to leverage the technologies from the Ceradyne acquisition. “Beyond that now, there is a team in place that’s looking upon the opportunities across businesses.”