The stock of Neogen Corporation rose 6% on Tuesday after the firm agreed to merge with 3M's food safety division.

The combined firm is expected to be valued $9.3 billion, including debt, and generate roughly $1 billion in yearly income. The deal will pay $1 billion to 3M. The stock of the corporation was up 1%.

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The new firm will be 50.1 % owned by 3M stockholders and 49.9% owned by Neogen. The deal is scheduled to be completed by the end of September.

Cost savings from the merger are expected to increase the new company's profits by the end of year three following the transaction's conclusion. Neogen is also expected to gain from 3M's exposure to lucrative food safety areas.

The transaction is set up as a Reverse Morris Trust, which is a tax-advantaged option for firms to spin off a subsidiary. The food safety division of 3M will be spun off or split off to its shareholders and amalgamated with a wholly-owned subsidiary of Neogen at the same time.

The combined firm will be governed by Neogen's management team.