NOTE 2. Acquisitions and Divestitures

3M makes acquisitions of certain businesses from time to time that the Company feels align with its strategic intent with respect to, among other factors, growth markets and adjacent product lines or technologies. Goodwill resulting from business combinations is largely attributable to the existing workforce of the acquired businesses and synergies expected to arise after 3M’s acquisition of these businesses. In addition to business combinations, 3M periodically acquires certain tangible and/or intangible assets and purchases interests in certain enterprises that do not otherwise qualify for accounting as business combinations. These transactions are largely reflected as additional asset purchase and investment activity.

During the nine months ended September 30, 2015, the purchase price paid for business combinations (net of cash acquired) was $2.9 billion (discussed below). The allocation of substantially all the purchase consideration related to the August 2015 Capital Safety and Polypore Separations Media acquisitions is considered preliminary. 3M expects to finalize the allocation of purchase price within the one year measurement-period following these acquisitions.


	2015 Acquisition Activity
(Millions)			Polypore
Asset (Liability)	Capital Safety		Separations Media		Other		Total
Accounts receivable	$	66	$	30	$	7	$	103
Inventory		64		35		4		103
Other current assets		10		1		4		15
Property, plant, and equipment		35		132		7		174
Purchased finite-lived intangible assets		1,009		329		51		1,389
Purchased goodwill		1,782		628		95		2,505
Accounts payable and other liabilities, net of other assets		(77)		(118)		(5)		(200)
Interest bearing debt		(767)		—		—		(767)
Deferred tax asset/(liability)		(402)		—		(10)		(412)

Net assets acquired	$	1,720	$	1,037	$	153	$	2,910

Supplemental information:
Cash paid	$	1,754	$	1,037	$	154	$	2,945
Less: Cash acquired		34		—		1		35
Cash paid, net of cash acquired	$	1,720	$	1,037	$	153	$	2,910

Purchased identifiable finite-lived intangible assets related acquisitions which closed in the nine months ended September 30, 2015 totaled $1.4 billion. The associated finite-lived intangible assets acquired will be amortized on a systematic and rational basis (generally straight line) over a weighted-average life of 17 years (lives ranging from two to 23 years). Acquired in-process research and development and identifiable intangible assets for which significant assumed renewals or extensions of underlying arrangements impacted the determination of their useful lives were not material. Pro forma information related to acquisitions was not included because the impact on the Company’s consolidated results of operations was not considered to be material.

In March 2015, 3M (Health Care Business) purchased all of the outstanding shares of Ivera Medical Corp., headquartered in San Diego, California. Ivera Medical Corp. is a manufacturer of health care products that disinfect and protect devices used for access into a patient’s bloodstream. In addition, in the first quarter of 2015, 3M (Industrial Business) purchased the remaining interest in a former equity method investment for an immaterial amount.

In August 2015, 3M (Safety and Graphics Business) acquired all of the outstanding shares of Capital Safety Group S.A.R.L., with operating headquarters in Bloomington, Minnesota, from KKR & Co. L.P. for $1.7 billion, net of cash acquired. The net assets acquired included the assumption of $0.8 billion of debt. Capital Safety is a leading global provider of fall protection equipment.

In August 2015, 3M (Industrial Business) acquired the assets and liabilities associated with Polypore International, Inc.’s Separations Media business, headquartered in Wuppertal, Germany, for $1.0 billion. Polypore’s Separations Media business is a leading provider of microporous membranes and modules for filtration in the life sciences, industrial and specialty segments.

Divestitures:

3M may divest certain businesses from time to time based upon review of the Company’s portfolio considering, among other items, factors relative to the extent of strategic and technological alignment and optimization of capital deployment, in addition to considering if selling the businesses results in the greatest value creation for the Company and for shareholders.

In January 2015, 3M (Electronics and Energy Business) completed the sale of its global static control business to Desco Industries Inc., based in Chino, California. 2014 sales of this business were $46 million. This transaction was not considered material.

In October 2015, 3M (Safety and Graphics Business) announced that it completed the sale of assets of its North American library systems business to One Equity Partners Capital Advisors L.P. (OEP) and that it entered into agreements for OEP to purchase the assets of its remaining global library systems business. In October 2015, 3M (Safety and Graphics Business) also announced that it received a binding offer from Hills Numberplates Limited to purchase Faab Fabricauto, a wholly-owned subsidiary of 3M. The library systems business, part of the Traffic Safety and Security Division, delivers circulation management solutions to library customers with on-premise hardware and software, maintenance and service, and an emerging cloud-based digital lending platform. Faab Fabricauto, also part of the Traffic Safety and Security Division, is a leading French manufacturer of license plates and signage solutions. The aggregate selling price relative to the global library systems and Faab Fabricauto divestiture transactions is approximately $120 million, subject to working capital at close. The remaining transactions are expected to close in the fourth quarter of 2015. The Company expects a net pre-tax gain of approximately $45 million (approximately $10 million after tax) as a result of the sale and any adjustment of carrying value related to these divestitures. The aggregate operating income of these businesses included in the Company’s operating results for the periods presented and the amounts of major assets and liabilities of associated disposal groups classified as held-for-sale as of September 30, 2015 were not material.

Refer to Note 2 in 3M’s 2014 Annual Report on Form 10-K for more information on 3M’s acquisitions and divestitures.