Neogen CEO John Adent on Wednesday touted the company’s deal to merge with 3M‘s food-safety unit, telling CNBC’s Jim Cramer it improves revenue growth opportunities and fuels innovation on emerging technologies such as the blockchain.
Neogen — which makes animal health-care products and food safety tests, including those that can be used to detect pathogens and allergens — announced merger plans Tuesday. The news sent the Michigan-based company’s stock higher by 8.2% Tuesday, although it gave back some of those gains Wednesday when it lost 1.34%.
Combining with 3M’s food-safety unit “doubles the size of our business,” Adent said in an interview on “Mad Money.” “It really allows us to reach more customers more often with an unparalleled product offering. … It’s going to help us drive this industry forward through our data analytics platform and our blockchain solution that really increases the efficiency, traceability and enhance the food-safety protocols for customers.”
Blockchains are decentralized digital ledgers that are most commonly associated with cryptocurrencies such as bitcoin and ether. However, that’s not its only use case.
Neogen partnered with Ripe Technology nearly two years ago to start adapting the blockchain into its work on food safety diagnostics and animal genomics. The blockchain is helpful to Neogen because it “permanently connects a tremendous amount of potentially critical data,” Adent said in a release at the time.
On Wednesday, he further elaborated on how Neogen uses blockchain technology for food safety.
“When you go to the store and buy one of our customers’ steaks and you take it home, if you send me a sample, I’m going to be able to tell you where that animal lived, what that animal ate, all the inputs into that animal, every single stop along the way until it got to your dinner plate,” Adent told Cramer.
Adent will run the combined company, which is estimated to have an enterprise value of roughly $9.3 billion. 3M shareholders will get 50.1% of the new entity, and Neogen shareholders receive the remaining 49.9%.
The transaction, which is being completed using a tax-advantaged Reverse Morris Trust, is expected to close by the end of the third quarter next year.
“That’s a business that we’ve admired for a long time, that 3M business. We think it’s a great business. It’s a great complementary fit for us. They’ve got tremendous IP,” and passionate employees, Adent said. “By bringing it into us, we can give them the resources they need to grow and the focus they need.”
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