UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 8-K



CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 12, 2022



NEOGEN CORPORATION
(Exact name of registrant as specified in its charter)



Michigan
0-17988
38-2367843
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
 
620 Lesher Place Lansing, Michigan
48912
(Address of principal executive offices)
(Zip Code)

517-372-9200
(Registrant’s telephone number, including area code)

N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each Class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Common Stock, $0.16 par value per share
 
NEOG
 
The NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Item 7.01.  Regulation FD

As previously disclosed, on December 13, 2021, 3M Company (“3M”), Garden SpinCo Corporation, currently a wholly owned subsidiary of 3M (“SpinCo”), Neogen Corporation (“Neogen”) and Nova RMT Sub, Inc., a wholly owned subsidiary of Neogen, entered into certain definitive agreements providing for the combination of 3M’s food safety business (the “Food Safety Business”) with Neogen in a Reverse Morris Trust transaction (the “proposed transaction”).  On August 4, 2022, 3M commenced an exchange offer related to the proposed transaction.  In connection with the proposed transaction, including the exchange offer, SpinCo filed a registration statement on Form S-4 and Form S-1 (Reg. No. 333-263669) (the “SpinCo Registration Statement”) with the Securities and Exchange Commission (the “SEC”) and Neogen filed a registration statement on Form S-4 (Reg. No. 333-263667) (the “Neogen Registration Statement” and, together with the SpinCo Registration Statement, the “Registration Statements”).  Each of the SpinCo Registration Statement and the Neogen Registration Statement were declared effective by the Securities and Exchange Commission on August 4, 2022.

This Current Report on Form 8-K is being furnished to provide updated unaudited pro forma condensed combined financial information of Neogen and the Food Safety Business as of and for the twelve months ended May 31, 2022, which will be incorporated by reference into each of the SpinCo Registration Statement and the Neogen Registration Statement. The updated unaudited pro forma condensed combined financial information has been prepared utilizing the audited consolidated financial statements of Neogen as of and for the year ended May 31, 2022, which are included in Neogen’s Annual Report on Form 10-K, the historical combined balance sheet of the Food Safety Business as of June 30, 2022 and the historical combined statement of income of the Food Safety Business for the twelve months ended June 30, 2022 derived from the audited combined financial statements of the Food Safety Business as of and for the year ended December 31, 2021 included in the Registration Statements and the unaudited interim combined financial statements of the Food Safety Business as of and for the six months ended June 30, 2022 and June 30, 2021 furnished by 3M in a Current Report on Form 8-K on August 12, 2022 and incorporated by reference into the Registration Statements.

The unaudited pro forma condensed combined financial information of Neogen and the Food Safety Business as of May 31, 2022 and for the twelve months ended May 31, 2022, including Summary Unaudited Pro Forma Combined Financial Information of Neogen as of and for such dates, furnished on Exhibit 99.1 and 99.2 to this Current Report on Form 8-K shall be deemed incorporated by reference into the SpinCo Registration Statement and the Neogen Registration Statement. To the extent that information in this Current Report on Form 8-K differs from or updates information contained in the SpinCo Registration Statement or the Neogen Registration Statement, the information in this Current Report on Form 8-K shall supersede or supplement the information in the SpinCo Registration Statement or the Neogen Registration Statement, as applicable.

Cautionary Note on Forward-Looking Statements

This communication includes “forward-looking statements” as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including statements regarding the proposed transaction between Neogen, 3M and SpinCo. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “target,” “endeavor,” “seek,” “predict,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. All statements, other than historical facts, including, but not limited to, statements regarding the expected timing and structure of the proposed transaction, the ability of the parties to complete the proposed transaction, the expected benefits of the proposed transaction, including future financial and operating results and strategic benefits, the tax consequences of the proposed transaction, and the combined Neogen-SpinCo company’s plans, objectives, expectations and intentions, legal, economic and regulatory conditions, and any assumptions underlying any of the foregoing, are forward-looking statements.



These forward-looking statements are based on Neogen and 3M’s current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from Neogen and 3M’s current expectations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) that one or more closing conditions to the proposed transaction may not be satisfied or waived, on a timely basis or otherwise, including that the required approval by the shareholders of Neogen may not be obtained; (2) the risk that the proposed transaction may not be completed on the terms or in the timeframe expected by Neogen, 3M and SpinCo, or at all; (3) unexpected costs, charges or expenses resulting from the proposed transaction; (4) uncertainty of the expected financial performance of the combined company following completion of the proposed transaction; (5) failure to realize the anticipated benefits of the proposed transaction, including as a result of delay in completing the proposed transaction or integrating the business of Neogen and the Food Safety Business, on the expected timeframe or at all; (6) the ability of the combined company to implement its business strategy; (7) difficulties and delays in the combined company achieving revenue and cost synergies; (8) inability of the combined company to retain and hire key personnel; (9) the occurrence of any event that could give rise to termination of the proposed transaction; (10) the risk that stockholder litigation in connection with the proposed transaction or other litigation, settlements or investigations may affect the timing or occurrence of the proposed transaction or result in significant costs of defense, indemnification and liability; (11) evolving legal, regulatory and tax regimes; (12) changes in general economic and/or industry specific conditions; (13) actions by third parties, including government agencies; (14) the risks that the anticipated tax treatment of the proposed transaction is not obtained; (15) the risk of greater than expected difficulty in separating the Food Safety Business from the other businesses of 3M; (16) risks related to the disruption of management time from ongoing business operations due to the pendency of the proposed transaction, or other effects of the pendency of the proposed transaction on the relationship of any of the parties to the proposed transaction with their employees, customers, suppliers, or other counterparties; and (17) risk factors detailed from time to time in Neogen’s and 3M’s reports filed with the SEC, including Neogen’s and 3M’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC, including the Neogen Registration Statement, which was declared effective by the SEC on August 4, 2022, Neogen’s definitive proxy statement on Schedule 14A with respect to the special meeting of Neogen shareholders in connection with the proposed transaction filed with the SEC on July 18. 2022, as amended and supplemented (the “Proxy Statement”) and the SpinCo Registration Statement, which was declared effective by the SEC on August 4, 2022. The foregoing list of important factors is not exclusive.

Any forward-looking statements speak only as of the date of this communication. None of Neogen, 3M or SpinCo undertakes, and each party expressly disclaims, any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.

Important Information About the Transaction and Where to Find It

In connection with the proposed transaction, SpinCo filed the SpinCo Registration Statement and Neogen filed the Neogen Registration Statement and the Proxy Statement.  In addition, 3M filed with the SEC on August 4, 2022 a Schedule TO (as may be amended and supplemented, the “3M Schedule TO”) in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE SPINCO REGISTRATION STATEMENT, NEOGEN REGISTRATION STATEMENT, PROXY STATEMENT, 3M SCHEDULE TO AND ANY OTHER RELEVANT DOCUMENTS THAT ARE MADE AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT NEOGEN, 3M, SPINCO AND THE PROPOSED TRANSACTION. The SpinCo Registration Statement, Neogen Registration Statement, Proxy Statement, 3M Schedule TO and other documents relating to the proposed transaction (as they become available) can also be obtained free of charge from the SEC’s website at www.sec.gov. The SpinCo Registration Statement, Neogen Registration Statement, Proxy Statement, 3M Schedule TO and other documents (as they become available) can also be obtained free of charge from 3M upon written request to 3M Investor Relations Department, Bldg. 224-1 W-02, St. Paul, MN 55144, or by e-mailing investorrelations@3M.com or upon written request to Neogen’s Investor Relations, 620 Lesher Place, Lansing, Michigan 48912 or by e-mailing ir@neogen.com.



Participants in the Solicitation

This communication is not a solicitation of a proxy from any investor or security holder. However, Neogen, 3M and certain of their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from shareholders of Neogen in connection with the proposed transaction under the rules of the SEC. Information regarding the persons who are, under the rules of the SEC, participants in the solicitation of the shareholders of Neogen in connection with the proposed transaction, including a description of their direct or indirect interests, by security holdings or otherwise, are set forth in SpinCo Registration Statement, Neogen Registration Statement and Proxy Statement referenced above that were filed with the SEC. Information about the directors and executive officers of Neogen may also be found in Neogen’s Annual Report on Form 10-K filed with the SEC on July 27, 2022, and its definitive proxy statement relating to its 2021 Annual Meeting of Shareholders filed with the SEC on August 31, 2021. Information about the directors and executive officers of 3M may be found in its Annual Report on Form 10-K filed with the SEC on February 9, 2022, and its definitive proxy statement relating to its 2022 Annual Meeting of Stockholders filed with the SEC on March 23, 2022. These documents can be obtained free of charge from the sources indicated above. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the SpinCo Registration Statement, Neogen Registration Statement and Proxy Statement filed with the SEC.

No Offer or Solicitation

This communication is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Item 9.01. Financial Statements and Exhibits

(d)
Exhibits.

The following exhibits are furnished pursuant to Item 7.01 of Form 8-K and should not be deemed to be “filed” under the Securities Exchange Act of 1934.

(d) Exhibits

Exhibit Number
 
Description
 
Summary Unaudited Pro Forma Combined Financial Information of Neogen (furnished pursuant to Item 7.01 hereof)
 
Unaudited pro forma condensed combined financial information of Neogen and the Food Safety Business as of May 31, 2022 and for the twelve months ended May 31, 2022 (furnished pursuant to Item 7.01 hereof).
104
 
Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document).



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
NEOGEN CORPORATION
     
 
By:
/s/ Amy M. Rocklin
   
Name:
Amy M. Rocklin
   
Title:
Vice President, General Counsel and Corporate Secretary
       
 
Date:
August 12, 2022





Exhibit 99.1

SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION OF NEOGEN

On December 13, 2021, 3M Company (“3M”), Garden SpinCo Corporation (“Garden SpinCo”), currently a wholly owned subsidiary of 3M, Neogen Corporation (“Neogen”) and Nova RMT Sub, Inc., a wholly owned subsidiary of Neogen (“Merger Sub”), entered into certain definitive agreements, including the Agreement and Plan of Merger, dated as of December 13, 2021, by and among 3M, Neogen, Garden SpinCo and Merger Sub, the Separation and Distribution Agreement, dated as of December 13, 2021, by and among 3M, Garden SpinCo and Neogen, and the Asset Purchase Agreement, dated as of December 13, 2021, by and between 3M and Neogen, pursuant to which, among other things, the Food Safety Business (defined below) will combine with Neogen in a Reverse Morris Trust transaction (the transactions contemplated by the Merger Agreement, Separation Agreement, Asset Purchase Agreement and related transaction documents, collectively, the “Transactions”).  The following summary unaudited pro forma combined financial information of Neogen and the Food Safety Business is being provided to help you in your analysis of the financial aspects of the Transactions.

As used in this document, the “Food Safety Business” refers to the business conducted by the Food Safety department of 3M and its subsidiaries.  The Food Safety Business includes the manufacturing, marketing, distributing, selling and servicing of products or services designed or marketed for (i) detecting, enumerating and culturing (or collecting or holding for the purpose of detecting, enumerating, and culturing) microorganisms or food allergens in commercial food safety applications (except where solely performed to assess the need for or to evaluate the efficacy of filtration and separation products of the 3M Separation and Purification Sciences Division) and (ii) detecting adenosine triphosphate to determine the hygienic status of surfaces, products or environments, in each case in commercial food safety applications.

Summary Unaudited Pro Forma Combined Financial Information of Neogen

The following tables present summary unaudited pro forma combined financial information of Neogen, which has been prepared by Neogen to reflect the Transactions as described in, and should be read in conjunction with, the Unaudited Pro Forma Condensed Combined Financial Information of Neogen and the Food Safety Business included in Exhibit 99.2 to the current report on Form 8-K to which this document is attached as an exhibit. The summary unaudited pro forma combined balance sheet as of May 31, 2022 has been prepared to reflect the Transactions as if they had occurred on May 31, 2022. The summary unaudited pro forma combined statements of income for the year ended May 31, 2022 have been prepared to reflect the Transactions as if they had occurred on June 1, 2021.

In addition, the tables below present summary unaudited pro forma condensed combined statements of income for Neogen for the twelve months ended February 28, 2022, to reflect the Transactions as if they had occurred on June 1, 2020. The presentation of this twelve months ended February 28, 2022 information is not made in accordance with U.S. generally accepted accounting principles (“GAAP”). These twelve months ended February 28, 2022 results are for illustrative purposes only. This data is presented as it is the basis for certain ratios and as adjusted financial information included in Neogen’s Registration Statement on Form S-4 (Registration No. 333-263667) (the “Neogen Registration Statement”) and Garden SpinCo’s Registration Statement on Form S-4 and Form S-1 (Registration No. 333-263669) (the “SpinCo Registration Statement” and, together with the Neogen Registration Statement, the “Registration Statements”) that Neogen believes is useful as supplemental measures for stockholders in assessing the impact of the Transactions and because such information was provided to participants in the offering of 8.625% Senior Notes due 2030 that were issued by Garden SpinCo in connection with the Transactions. See “Non-GAAP Financial Measures” described below.

(in thousands)
 
As of
May 31, 2022
 
Pro Forma Condensed Combined Balance Sheet:
     
Total assets
 
$
4,799,026
 
Long-term debt
 
$​
 986,688  
Total liabilities
 
$
1,617,129
 
Total shareholders’ equity
 
$
3,181,897
 



 
Fiscal Year
Ended May 31,
   
Twelve Months
Ended February 28,
 
(In thousands of U.S. dollars, except per share and % amounts)
 
2022
   
2022
 
Pro Forma Condensed Combined Statements of Income:
           
Total revenues
 
$​
 897,562    
$
888,984
 
Cost of revenues
   
444,121
     
433,826
 
Gross margin
   
453,441
     
455,158
 
Operating expenses
   
511,104
     
457,755
 
Operating income (loss)
   
(57,663
)
   
(2,597
)
Interest income
   
1,267
     
784
 
Finance expense
   
(66,965
)
   
(59,465
)
Other income (expense)
   
322
     
(186
)
Total other income (expense)
   
(65,376
)
   
(58,867
)
Income (loss) before taxes
   
(123,039
)
   
(61,464
)
Provision for Income Taxes
   
(24,207
)
   
(12,142
)
Net Income (loss)
 
$
(98,832
)
 
$
(49,322
)
Pro forma net income margin (%)(a)
   
(11.0
)%
   
(5.5
)%
Pro forma net (loss) attributable to common shareholders.
 
$
(98,832
)
 
$
(49,322
)
Pro forma net (loss) per share of common stock – basic and diluted
   
(0.46
)
   
(0.23
)
Weighted average number of shares outstanding – basic and diluted
   
215,954
     
215,918
 
         

(a)
Management of Neogen defines pro forma net income margin as pro forma net income as a percentage of pro forma total revenues.

   
As of and for the
 
(In thousands of U.S. dollars, except as specified)
 
Year Ended
May 31,
   
Twelve Months
Ended
February 28,
 
 
2022
   
2022
 
Other Financial Information(1):
 
       
Pro Forma EBITDA(2)(4)
   
143,910
     
198,506
 
Pro Forma Adjusted EBITDA(3)(4)
   
221,946
     
226,721
 
Pro Forma Adjusted EBITDA margin(3)(4)
   
24.7
%
   
25.5
%
Pro Forma Net Debt(5)
   
626,412
     
637,607
 
Ratio of Pro Forma Net Debt to Pro Forma Adjusted EBITDA(3)(5)(6)
   
2.8
x
   
2.8
x
Ratio of Pro Forma Adjusted EBITDA to pro forma finance expense(3)(7)
   
3.3
x
   
3.8
x
         

(1)
See “Non-GAAP Financial Measures” for further details.
(2)
Management of Neogen defines Pro Forma EBITDA as pro forma net income before pro forma interest, income taxes, and depreciation and amortization.
(3)
Management of Neogen defines Pro Forma Adjusted EBITDA as Pro Forma EBITDA, adjusted for pro forma stock-based compensation and certain pro forma transaction fees and expenses.
(4)
A reconciliation between pro forma net income, on one hand, and pro forma EBITDA and Pro Forma Adjusted EBITDA, on the other hand, is as follows:



 
Year Ended
May 31,
   
Twelve Months
Ended
February 28,
 
(In thousands of U.S. dollars, except as specified)
 
2022
   
2022
 
Pro forma net income
 
$
(98,832
)
 
$
(49,322
)
Pro forma net income margin (%)(a)
   
(11.0
)%
   
(5.5
)%
Provision for income taxes
   
(24,207
)
   
(12,142
)
Interest
   
65,698
     
58,681
 
Depreciation and amortization
   
201,251
     
201,289
 
Pro Forma EBITDA
   
143,910
     
198,506
 
Stock-based compensation
   
8,848
     
8,307
 
Certain transaction fees and expenses
   
69,188
     
19,908
 
Pro Forma Adjusted EBITDA
 
$​
 221,946    
$
226,721
 
Pro forma Adjusted EBITDA margin (%)(b)
   
24.7
%
   
25.5
%
         

 
(a)
Management of Neogen defines pro forma net income margin as pro forma net income as a percentage of pro forma total revenues.
 
(b)
Management of Neogen defines Pro Forma Adjusted EBITDA margin as Pro Forma Adjusted EBITDA as a percentage of pro forma total revenues.
(5)
Management of Neogen defines pro forma net debt as pro forma long-term debt less pro forma cash and cash equivalents and marketable securities.
(6)
The ratio of Pro Forma Net Debt to Pro Forma Adjusted EBITDA is determined by dividing (i) Pro Forma Net Debt as of period end by (ii) Pro Forma Adjusted EBITDA for the twelve months then ended.
(7)
The ratio of Pro Forma Adjusted EBITDA to pro forma finance expense is determined by dividing Pro Forma Adjusted EBITDA by pro forma finance expense. For each increase or decrease in assumed interest rates of 0.125% related to the assumed $650.0 million Term Loan Facility to be issued on a pro forma basis as part of the Transactions, annual interest expense would increase or decrease by approximately $0.8 million for the year ended May 31, 2022 and for the twelve months ended February 28, 2022.

Non-GAAP Financial Measures

This document includes certain pro forma financial information of Neogen that differs from what is reported in accordance with GAAP. These non-GAAP financial measures consist of Pro Forma EBITDA, Pro Forma Adjusted EBITDA, Pro Forma Adjusted EBITDA margin and pro forma net debt. These non-GAAP financial measures are included in this document because management of the Food Safety Business believes that they provide investors with additional useful information to measure the performance or liquidity of the Food Safety Business, and because these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties as common performance measures to compare results or liquidity or estimate valuations across companies in the Food Safety Business’s industry. In particular:

 
Management of Neogen defines Pro Forma EBITDA as pro forma net income before pro forma interest, income taxes, and depreciation and amortization.
     
 
Management of Neogen defines Pro Forma Adjusted EBITDA as Pro Forma EBITDA, adjusted for pro forma stock-based compensation and certain pro forma transaction fees and expenses.
     
 
Management of Neogen defines Pro Forma Adjusted EBITDA margin as Pro Forma Adjusted EBITDA as a percentage of pro forma total revenues.



 
Management of Neogen defines pro forma net debt as pro forma long-term debt less pro forma cash and cash equivalents and marketable securities. Pro forma net debt (and measures derived therefrom) will form the basis for calculations to determine the combined company’s compliance with certain covenants in the Permanent Financing.

These non-GAAP financial measures are presented for informational purposes only. Pro Forma EBITDA, Pro Forma Adjusted EBITDA, Pro Forma Adjusted EBITDA margin and pro forma net debt are not recognized terms under GAAP and should not be considered in isolation or as a substitute for, or superior to, net income (loss), operating income, cash flow from operating activities or other measures of financial performance or any other generally accepted accounting principles. This information does not purport to represent the results Neogen or the combined company would have achieved had any of the transactions for which an adjustment is made occurred at the beginning of the periods presented or as of the dates indicated. This information is inherently subject to risks and uncertainties. It may not give an accurate or complete picture of Neogen’s financial condition or results of operations for the periods presented and should not be relied upon when making an investment decision.

The use of the terms Pro Forma EBITDA, Pro Forma Adjusted EBITDA, Pro Forma Adjusted EBITDA margin and pro forma net debt may not be comparable to similarly titled measures used by other companies or persons due to potential differences in the method of calculation. Additionally, the non-GAAP financial measures of Neogen may not be directly comparable to future non-GAAP financial measures that may be used by the combined company.

These non-GAAP financial measures have limitations as analytical tools. For example, for Pro Forma EBITDA-based metrics:

 
do not reflect changes in, or cash requirements for Neogen’s working capital needs;
     
 
do not reflect Neogen’s interest expense or cash requirements necessary to service interest or principal payments on its indebtedness;
     
 
do not reflect Neogen’s tax expense or the cash requirements to pay its taxes;
     
 
do not reflect the historical cash expenditures or future requirements for capital expenditures or contractual commitments;
     
 
do not reflect the effect on earnings or changes resulting from matters that Neogen considers not to be indicative of its future operations;
     
 
do not reflect any cash requirements for future replacements of assets that are being depreciated and amortized; and
     
 
may be calculated differently from other companies in Neogen’s industry limiting their usefulness as comparative measures.

You should compensate for these limitations by relying primarily on the financial statements of Neogen and the Food Safety Business that are included or incorporated by reference in the Registration Statements or included in the current report on Form 8-K to which this document is attached, and using these non-GAAP financial measures only as a supplement to evaluate the respective performance of Neogen and the Food Safety Business.

In addition, this document contains certain unaudited pro forma financial information under the heading “Twelve Months Ended February 28, 2022” calculated (i) in the case of information derived from the financial information of Neogen, by adding the relevant financial information for the nine months ended February 28, 2022 to the relevant financial information for the year ended May 31, 2021, and subtracting the relevant financial information for the nine months ended February 28, 2021 and (ii) in the case of information derived from the financial information of the Food Safety Business, utilizing information for the twelve months ended March 31, 2022, by adding the relevant financial information for the three months ended March 31, 2022 to the relevant financial information for the year ended December 31, 2021, and subtracting the relevant financial information for the three months ended March 31, 2021.   As Neogen’s financial year ends on May 31, and the Food Safety Business’s financial year ends on December 31, the presentation of this information is not made in accordance with GAAP. These results are for illustrative purposes only. We present this data as it is the basis for certain ratios and as adjusted financial information included in the Registration Statements that Neogen believes is useful as supplemental measures for stockholders in assessing the impact of the Transactions and was provided to investors in connection with the offering of the 8.625% Senior Notes due 2030 issued by Garden SpinCo. This data is not indicative of the results that may be expected for any fiscal year end, and should not be used as the basis for, or prediction of, an annualized calculation.



Cautionary Note on Forward-Looking Statements

This document includes “forward-looking statements” as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including statements regarding the proposed transaction between Neogen, 3M and Garden SpinCo. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “target,” “endeavor,” “seek,” “predict,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. All statements, other than historical facts, including, but not limited to, statements regarding the expected timing and structure of the proposed transaction, the ability of the parties to complete the proposed transaction, the expected benefits of the proposed transaction, including future financial and operating results and strategic benefits, the tax consequences of the proposed transaction, and the combined Neogen-Garden SpinCo company’s plans, objectives, expectations and intentions, legal, economic and regulatory conditions, and any assumptions underlying any of the foregoing, are forward-looking statements.

These forward-looking statements are based on Neogen and 3M’s current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from Neogen and 3M’s current expectations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) that one or more closing conditions to the proposed transaction may not be satisfied or waived, on a timely basis or otherwise, including that the required approval by the shareholders of Neogen may not be obtained; (2) the risk that the proposed transaction may not be completed on the terms or in the timeframe expected by Neogen, 3M and Garden SpinCo, or at all; (3) unexpected costs, charges or expenses resulting from the proposed transaction; (4) uncertainty of the expected financial performance of the combined company following completion of the proposed transaction; (5) failure to realize the anticipated benefits of the proposed transaction, including as a result of delay in completing the proposed transaction or integrating the business of Neogen and the Food Safety Business, on the expected timeframe or at all; (6) the ability of the combined company to implement its business strategy; (7) difficulties and delays in the combined company achieving revenue and cost synergies; (8) inability of the combined company to retain and hire key personnel; (9) the occurrence of any event that could give rise to termination of the proposed transaction; (10) the risk that stockholder litigation in connection with the proposed transaction or other litigation, settlements or investigations may affect the timing or occurrence of the proposed transaction or result in significant costs of defense, indemnification and liability; (11) evolving legal, regulatory and tax regimes; (12) changes in general economic and/or industry specific conditions; (13) actions by third parties, including government agencies; (14) the risks that the anticipated tax treatment of the proposed transaction is not obtained; (15) the risk of greater than expected difficulty in separating the Food Safety Business from the other businesses of 3M; (16) risks related to the disruption of management time from ongoing business operations due to the pendency of the proposed transaction, or other effects of the pendency of the proposed transaction on the relationship of any of the parties to the proposed transaction with their employees, customers, suppliers, or other counterparties; and (17) risk factors detailed from time to time in Neogen’s and 3M’s reports filed with the SEC, including Neogen’s and 3M’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC, including the Neogen Registration Statement, which was declared effective by the SEC on August 4, 2022, Neogen’s definitive proxy statement on Schedule 14A with respect to the special meeting of Neogen shareholders in connection with the proposed transaction filed with the SEC on July 18. 2022, as amended and supplemented, and the SpinCo Registration Statement, which was declared effective by the SEC on August 4, 2022. The foregoing list of important factors is not exclusive.

Any forward-looking statements speak only as of the date of this communication. None of Neogen, 3M or Garden SpinCo undertakes, and each party expressly disclaims, any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.




Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION OF NEOGEN AND THE FOOD SAFETY BUSINESS

On December 13, 2021, 3M Company (“3M”), Garden SpinCo Corporation (“Garden SpinCo”), currently a wholly owned subsidiary of 3M, Neogen Corporation (“Neogen”) and Nova RMT Sub, Inc., a wholly owned subsidiary of Neogen (“Merger Sub”), entered into certain definitive agreements, including the Agreement and Plan of Merger, dated as of December 13, 2021, by and among 3M, Neogen, Garden SpinCo and Merger Sub (as it may be amended from time to time, the “Merger Agreement”), the Separation and Distribution Agreement, dated as of December 13, 2021, by and among 3M, Garden SpinCo and Neogen (as it may be amended from time to time, the “Separation Agreement”) and the Asset Purchase Agreement, dated as of December 13, 2021, by and between 3M and Neogen (as it may be amended from time to time, the “Asset Purchase Agreement”), pursuant to which, among other things, the Food Safety Business (defined below) will combine with Neogen in a Reverse Morris Trust transaction (the transactions contemplated by the Merger Agreement, Separation Agreement, Asset Purchase Agreement and related transaction documents, collectively, the “Transactions”).

In connection with the Transactions, 3M will effect (i) the separation of the Food Safety Business from 3M’s other businesses under the Separation Agreement, (ii) the distribution, through either (a) an exchange offer whereby 3M offers to its stockholders the ability to exchange all or a portion of their shares of 3M common stock for shares of Garden SpinCo common stock, which shares of Garden SpinCo common stock will be immediately converted into the right to receive Neogen common stock (the “Exchange Offer”) and, if the Exchange Offer is not fully subscribed, a distribution by 3M following the consummation of the Exchange Offer of the remaining shares of Garden SpinCo common stock owned by 3M on a pro rata basis to 3M stockholders whose shares of 3M common stock remain outstanding after consummation of the Exchange Offer (the “Clean-Up Spin-Off”), or (b) if the Exchange Offer is terminated by 3M without the exchange of shares (but the conditions to consummation of the Transactions have otherwise been satisfied), the distribution of all shares of Garden SpinCo common stock on a pro rata basis to 3M stockholders in a spin-off (the distributions in clause (a) or (b), as applicable, the “Distribution”), and (iii) immediately thereafter, (a) the merger of Merger Sub with and into Garden SpinCo, with Garden SpinCo becoming a wholly owned subsidiary of Neogen (the “Merger”)  and (b) the sale of certain assets directly from certain 3M subsidiaries to Neogen or to its subsidiaries under the Asset Purchase Agreement. As a result of and immediately following the Transactions, Garden SpinCo stockholders will own, in the aggregate, approximately 50.1% of the issued and outstanding shares of Neogen common stock and pre-Merger Neogen shareholders will own, in the aggregate, approximately 49.9% of the issued and outstanding shares of Neogen common stock. 3M stockholders that do not participate in the Exchange Offer will retain the shares of 3M common stock that they held prior to the Merger.

As used in this document, the “Food Safety Business” refers to the business conducted by the Food Safety department of 3M and its subsidiaries.  The Food Safety Business includes the manufacturing, marketing, distributing, selling and servicing of products or services designed or marketed for (i) detecting, enumerating and culturing (or collecting or holding for the purpose of detecting, enumerating, and culturing) microorganisms or food allergens in commercial food safety applications (except where solely performed to assess the need for or to evaluate the efficacy of filtration and separation products of the 3M Separation and Purification Sciences Division) and (ii) detecting adenosine triphosphate to determine the hygienic status of surfaces, products or environments, in each case in commercial food safety applications.

In connection with the Transactions, 3M, Neogen and Garden SpinCo have entered into or will enter into several other agreements to provide a framework for their relationship after the Distribution and the Merger. The following unaudited pro forma condensed combined financial information should be read in conjunction with the following financial statements and accompanying notes for the applicable periods:


the audited consolidated financial statements of Neogen as of and for the year ended May 31, 2022, which are included in Neogen’s Annual Report on Form 10-K for the year ended May 31, 2022, filed with the SEC on July 27, 2022;




the unaudited interim combined financial statements of the Food Safety Business as of June 30, 2022 and for the three and six months ended June 30, 2021 and June 30, 2022, which are included in Exhibit 99.2 to 3M’s current report on Form 8-K, filed with the U.S Securities and Exchange Commission on August 12, 2022 (the “interim period Food Safety Business financial statements”); and


the audited combined financial statements of the Food Safety Business as of and for the year ended December 31, 2021 (the “audited annual Food Safety Business financial statements”), which are included in Neogen’s registration statement on Form S-4 (Registration No. 333-263667), which was declared effective on August 4, 2022 (the “Neogen Registration Statement”).

The unaudited pro forma condensed combined financial information presented below is derived from the historical consolidated financial statements of Neogen and the historical combined financial statements of the Food Safety Business. The unaudited pro forma condensed combined financial information and the notes thereto have been prepared to illustrate the estimated effects of the Transactions in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 ”Amendments to Financial Disclosures about Acquired and Disposed Businesses”. Release No. 33-10786 replaced the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). Neogen has elected not to present Management’s Adjustments and only presents Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information. A description of the basis of presentation of these pro forma condensed combined financial information is included in Note 2, Basis of Presentation, to the Notes to the Unaudited Pro Forma Condensed Combined Financial Information.

The unaudited pro forma condensed combined financial information does not purport to represent what the actual consolidated results of operations or financial position of the combined company would have been had the Transactions occurred on the dates assumed, nor is it necessarily indicative of future consolidated results of operations or financial position of the combined company on a standalone basis.

As part of the larger 3M organization, the Food Safety Business has been able to receive services from 3M. Following the consummation of the Transactions, Neogen will need to replace these services either by providing them internally from Neogen’s existing services or by obtaining them from unaffiliated third parties. These services include certain operating and corporate level functions, the effective and appropriate performance of which is critical to the operations of the Food Safety Business and will be critical to the operations of the combined company following the consummation of the Transactions. At the closing of the Transactions, Neogen will enter into certain transition arrangements with 3M and Garden SpinCo (the “Transition Arrangements”), pursuant to which various categories of services will be provided to the Food Safety Business for a period of time following consummation of the Transactions, until the applicable term for each service has expired or has otherwise been terminated. The costs for these services could in the aggregate be higher than the combination of Neogen’s current costs and those reflected in the historical combined financial statements of the Food Safety Business.

The Transactions have not been consummated as of the date of the preparation of the unaudited pro forma condensed combined financial information and their completion is subject to numerous conditions, including the completion of the separation of the Food Safety Business from the businesses and operations of 3M that are not included in the Food Safety Business, the Distribution and the occurrence of certain other events contemplated by the definitive agreements entered into in connection with the Transactions, and thus there can be no assurances that the Transactions will be consummated. See the section titled “Risk Factors” in the Neogen Registration Statement for additional discussion of risk factors associated with the unaudited pro forma condensed combined financial information.



Unaudited Pro Forma Condensed Combined Balance Sheet
As of May 31, 2022
(in USD thousands)

   
Historical
   
Transaction Accounting Adjustments
       
   
Neogen
   
Food Safety
Business after
Reclassification
Adjustments
(Note 3)
   
Pre-Merger
Adjustments
   
Notes
   
Merger
Adjustments
   
Notes
   
Neogen
Pro Forma
Combined
 
Assets
                                         
Current assets:
                                         
Cash and cash equivalents
 
$
44,473
   
$
-
   
$
979,188
     
4a

 
$
(999,963
)
   
5, 6a

 
$
23,698
 
Marketable securities
   
336,578
     
-
     
-
     

     
-
             
336,578
 
Accounts receivable
   
99,674
     
51,686
     
(51,686
)
   
4b

   
-
             
99,674
 
Inventories
   
122,313
     
37,703
     
(26,036
)
   
4b

   
3,014
     
5, 6b

   
136,994
 
Prepaid expenses and other current assets
   
23,760
     
5,206
     
(5,206
)
   
4b

   
-
             
23,760
 
Total current assets
   
626,798
     
94,595
     
896,260
             
(996,949
)
           
620,704
 
                                                         
Property, plant and equipment
   
110,584
     
21,761
     
(2,644
)
   
4b

   
-
             
129,701
 
Right-of-use assets
   
3,184
     
1,012
     
-
             
-
             
4,196
 
Goodwill
   
142,704
     
79,983
     
(79,983
)
   
4b

   
1,190,781
     
5
     
1,333,485
 
Other intangible assets, net
   
107,503
     
2,934
     
(2,934
)
   
4b

   
2,600,000
     
5, 6c

   
2,707,503
 
Deferred tax assets
   
-
     
6,645
     
(6,645
)
   
4b

   
-
     

      -
 
Other non-current assets
   
2,156
       1,281      
-
             
-
             
3,437
 
Total assets
 
$
992,929
   
$
208,211
   
$
804,054
           
$
2,793,832
           
$
4,799,026
 


Unaudited Pro Forma Condensed Combined Balance Sheet
As of May 31, 2022
(in USD thousands)

   
Historical
   
Transaction Accounting Adjustments
       
   
Neogen
   
Food Safety
Business after
Reclassification
Adjustments
(Note 3)
   
Pre-Merger
Adjustments
   
Notes
   
Merger
Adjustments
   
Notes
   
Neogen
Pro Forma
Combined
 
Liabilities and Shareholders’ Equity
                                         
Current liabilities:
                                         
Accounts payable
 
$
34,614
   
$
12,083
     
(12,083
)
   
4b

 
$
(11,377
)
   
5, 6a

 
$
23,237
 
Accrued compensation
   
11,123
     
1,609
     
(1,609
)
   
4b

   
-
     

       11,123  
Income tax payable
   
2,126
     
-
     
-
             
-
             
2,126
 
Operating lease liabilities - current
   
-
     
-
     
-
             
-
             
-
 
Other accruals
   
29,981
     
4,217
     
(5,505
)
   
4a,b

   
(9,157
)
   
6e

   
19,536
 
Total current liabilities
   
77,844
     
17,909
     
(19,197
)
           
(20,534
)
           
56,022
 
                                                         
Deferred income taxes
   
17,011
     
8
     
(8
)
   
4b

   
546,000
     
5, 6d

   
563,011
 
Other non-current liabilities
   
10,700
     
708
     
-
             
-
             
11,408
 
Operating lease liabilities – non-current
   
-
     
-
     
-
             
-
             
-
 
Long-term debt
   
-
     
-
     
986,688
     
4a

   
-
             
986,688
 
Total liabilities
   
105,555
     
18,625
     
967,483
             
525,466
             
1,617,129
 
                                                         
Shareholders’ equity:
                                                       
Common stock
   
17,248
     
-
     
-
             
17,323
     
5, 6e

   
34,571
 
Parent company net investment
     -      
237,984
     
(157,504
)
   
4b

   
(80,480
)
   
5, 6e

   
-
 
Additional paid-in capital
   
309,984
     
-
     
-
             
2,317,575
     
5, 6e

   
2,627,559
 
Accumulated other comprehensive income (loss)
   
(27,769
)
   
(48,398
)
   
-
             
48,398
     
5, 6e

   
(27,769
)
Retained earnings
   
587,911
     
-
     
(5,925
)
   
4a

   
(34,450
)
   
6e

   
547,536
 
Total shareholders’ equity
   
887,374
     
189,586
     
(163,429
)
           
2,268,366
             
3,181,897
 
                                                         
Total liabilities and shareholders’ equity
 
$
992,929
   
$
208,211
   
$
804,054
           
$
2,793,832
           
$
4,799,026
 

See the accompanying “Notes to the Unaudited Pro Forma Condensed Combined Financial Information” below, which are an integral part hereof. The pro forma adjustments are explained in the notes below.


Unaudited Pro Forma Condensed Combined Statement of Income
For the year ended May 31, 2022
(in USD thousands, except per share amounts; shares outstanding in thousands)

   
Historical
   
Transaction Accounting Adjustments
       
   
Neogen
   
Food Safety
Business after
Reclassification
Adjustments
(Note 3)
   
Pre-Merger
Adjustments
   
Notes
   
Merger
Adjustments
   
Notes
   
Neogen
Pro Forma
Combined
 
Revenues
 
$
527,159
   
$
370,403
   
$
-
         
$
-
         
$
897,562
 
                                                     
Cost of revenues
   
284,146
     
151,673
     
(2,287
)
   
4c

   
10,589
     
6f

   
444,121
 
                                                         
Gross margin
   
243,013
     
218,730
     
2,287
             
(10,589
)
           
453,441
 
                                                         
Operating expenses
                                                       
Sales and marketing
   
84,604
     
55,700
     
-
             
-
             
140,304
 
General and administrative
   
82,742
     
29,205
     
(747
)
   
4b

   
217,227
     
6g

   
328,427
 
Research and development
   
17,049
     
25,324
     
-
             
-
             
42,373
 
                                                         
Total operating expenses (income)
   
184,395
     
110,229
     
(747
)
           
217,227
             
511,104
 
                                                         
Operating income (loss)
   
58,618
     
108,501
     
3,034
             
(227,816
)
           
(57,663
)
                                                         
Other income (expense)
                                                       
Interest income
   
1,267
     
-
     
-
             
-
             
1,267
 
Finance expense
   
-
     
-
     
-
             
(66,965
)
   
6h

   
(66,965
)
Other income (expense)
   
322
     
-
     
-
             
-
             
322
 
                                                         
Total other income (expense)
   
1,589
     
-
     
-
             
(66,965
)
           
(65,376
)
                                                         
Income (loss) before taxes
   
60,207
     
108,501
     
3,034
             
(294,781
)
           
(123,039
)
                                                         
Provision for income taxes
   
11,900
     
21,659
     
601
     
6i

   
(58,367
)
   
6i

   
(24,207
)
                                                         
Net income (loss)
 
$
48,307
   
$
86,842
   
$
2,433
           
$
(236,414
)
         
$
(98,832
)
                                                         
Net income (loss) per share available to common stockholders:
                                                       
Basic
 
$
0.45
                                           
$
(0.46
)
Diluted
 
$
0.45
                                           
$
(0.46
)
Weighted average shares outstanding:
                                                       
Basic
   
107,684
                                             
215,954
 
Diluted
   
108,020
                                             
215,954
 

See the accompanying “Notes to the Unaudited Pro Forma Condensed Combined Financial Information” below, which are an integral part hereof. The pro forma adjustments are explained in the notes below.



NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

1) DESCRIPTION OF TRANSACTIONS

On December 13, 2021, 3M, Garden SpinCo, Neogen and Merger Sub entered into certain definitive agreements, pursuant to which, among other things, the Food Safety Business will combine with Neogen in a Reverse Morris Trust transaction (the “Transactions”). In connection with the Transactions, 3M will effect (i) the separation of the Food Safety Business from 3M’s other businesses, (ii) the distribution, through either (a) the Exchange Offer and, if the Exchange Offer is not fully subscribed, a Clean-Up Spin-Off, or (b) if the Exchange Offer is terminated by 3M without the exchange of shares (but the conditions to consummation of the Transactions have otherwise been satisfied), the distribution of all shares of Garden SpinCo common stock on a pro rata basis to 3M stockholders in a spin-off, and (iii) immediately thereafter, (a) the merger of Merger Sub with and into Garden SpinCo, with Garden SpinCo becoming a wholly owned subsidiary of Neogen and (b) the sale of certain assets directly from certain 3M subsidiaries to Neogen or to its subsidiaries under the Asset Purchase Agreement.

Contemporaneously with the execution of the Merger Agreement, 3M, Garden SpinCo and Neogen entered into the Separation Agreement, and 3M and Neogen entered into the Asset Purchase Agreement.

To effect the Merger, each share of Garden SpinCo common stock will be converted into the right to receive a number of shares of common stock, par value $0.16 per share, of Neogen in accordance with an exchange ratio (the “Exchange Ratio”) set forth in the Merger Agreement. In addition, prior to or substantially concurrently with the effective time of the Merger, Garden SpinCo and Neogen expect to transfer aggregate consideration (consisting of cash and debt securities) to 3M valued at $1,000.0 million, as adjusted by certain items as described in the Separation Agreement (such consideration, together with the shares of common stock of Neogen described in the immediately preceding sentence, collectively “Merger Consideration”). The Merger Consideration has been estimated to be valued at approximately $3,279.9 million and is subject to certain adjustments set forth in the Merger Agreement related to the treatment and conversion of certain LTI awards and other cash adjustments. On completion of the Merger, pre-Merger Neogen shareholders will collectively own approximately 49.9% and pre-Merger Garden SpinCo stockholders will collectively own approximately 50.1% respectively of the issued and outstanding shares of Neogen common stock.

The Transactions are structured using a Reverse Morris Trust transaction structure. This transaction structure allows a parent company (in this case, 3M) to divest a subsidiary (in this case, Garden SpinCo) in a tax-efficient manner. The first step of such a transaction is a distribution of the subsidiary’s stock to the parent company stockholders (in this case, 3M’s distribution of the SpinCo common stock to 3M’s stockholders in the Distribution, which may be completed either by an Exchange Offer and a potential Clean-Up Spin-Off or a pro rata distribution of SpinCo common stock) in a transaction that is generally tax-free under Section 355 of the Internal Revenue Code of 1986, as amended. The distributed subsidiary then combines with a third party (in this case, Merger Sub through the Merger). Such a transaction can qualify as generally tax-deferred for U.S. federal income tax purposes for the parent company and its stockholders if the transaction structure meets the applicable requirements, including that the parent company stockholders own more than 50% of the stock of the combined entity immediately after the business combination. For information about the material tax consequences resulting from the Transactions, see the section titled “U.S. Federal Income Tax Consequences of the Distribution and the Merger” in the Neogen Registration Statement.

The parties determined to employ a Reverse Morris Trust transaction structure for the Transactions because, among other things, it provides a tax-efficient method to combine Neogen and the Food Safety Business. This offers an economic benefit to the parties relative to a taxable transaction structure.

The Exchange Ratio in the Merger Agreement is fixed to result in the number of shares of Neogen common stock that will ultimately be issued to former Garden SpinCo stockholders in the Merger being the number of shares that will result in Garden SpinCo stockholders owning, in the aggregate, approximately 50.1% of the total number of shares of Neogen common stock issued and outstanding immediately following the Merger. As a result, it is expected that, regardless of whether the shares of Garden SpinCo common stock are distributed through an Exchange Offer, with or without a Clean-Up Spin-Off, or on a pro rata basis to 3M stockholders in a spin-off, the number of shares of Neogen common stock that will ultimately be issued in the Merger will remain the same and 3M’s election to complete the distribution by way of an Exchange Offer or a pro rata spin-off does not affect the unaudited pro forma condensed combined financial information presented herein.



The Transactions are subject to the approval by Neogen’s stockholders of the issuance of Neogen shares in the Transactions and certain other transaction-related proposals and the satisfaction of certain closing conditions, including regulatory approvals.  The Transactions are expected to be completed in the third quarter of calendar year 2022.

2) BASIS OF PRESENTATION

The unaudited pro forma condensed combined financial information is prepared in accordance with Article 11 of Regulation S-X after giving effect to the Transactions and related adjustments and have been derived from the historical financial statements of Neogen and the Food Safety Business. The unaudited pro forma condensed combined balance sheet combines the historical condensed consolidated balance sheet of Neogen as of May 31, 2022 and the historical combined balance sheet of the Food Safety Business as of June 30, 2022, giving effect to the Transactions as if they had occurred on May 31, 2022.  The unaudited pro forma condensed combined statement of income for the year ended May 31, 2022 combines the historical consolidated statement of income of Neogen for the year ended May 31, 2022 and the historical combined statement of income of the Food Safety Business for the twelve months ended June 30, 2022, in each case giving effect to the Transactions as if they had occurred on June 1, 2021. The historical combined financial information of the Food Safety Business used to prepare the pro forma financial information (and, therefore, the unaudited pro forma condensed combined financial information presented herein) reflects the assets, liabilities and operations of the Food Safety Business to be transferred to Neogen pursuant to both the Separation Agreement and the Asset Purchase Agreement.

The unaudited pro forma condensed combined statement of income for the twelve months ended June 30, 2022 of the Food Safety Business has been derived by taking the audited combined statement of income for the year ended December 31, 2021, subtracting the unaudited combined statement of income for the six months ended June 30, 2021 and adding the unaudited combined statement of income for the six months ended June 30, 2022.

The fiscal year end of Neogen is May 31 and the fiscal year end of the Food Safety Business is December 31. The unaudited pro forma condensed combined financial information has been prepared utilizing period ends that are within one fiscal quarter, as permitted by Rule 11-02 Regulation S-X.

As discussed in the accompanying notes to the interim period Food Safety Business financial statements and audited annual Food Safety Business financial statements, the Food Safety Business historical balance sheet and historical income statements (collectively the “Food Safety Business historical financial statements”) have been prepared on a ”carve-out” basis from 3M consolidated financial statements using the historical results of operations, assets and liabilities of the Food Safety Business and include allocations of expenses from 3M. The allocations and estimates in such financial statements are based on assumptions that 3M’s management believes are reasonable, in the aggregate. As a result, the Food Safety Business’ historical financial statements may not necessarily reflect what its financial condition and results of operations would have been had the Food Safety Business been an independent, stand-alone entity during the periods presented.

The unaudited pro forma financial information has been compiled in a manner consistent with the accounting policies adopted by the Food Safety Business and is consistent with the accounting policies of Neogen, however, certain adjustments have been made to conform the Food Safety Business historical combined financial information to the presentation in the Neogen historical balance sheet and Neogen income statements.

Upon completion of the Merger, Neogen management will conduct a final review of the Food Safety Business’ accounting policies to determine if differences in accounting policies or financial statement classification exist that may require adjustments to or reclassification of the Food Safety Business’ results of operations, assets or liabilities to conform to Neogen’s accounting policies and classifications. As a result of that review, differences may be identified that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial information.



The unaudited pro forma condensed combined financial information presents the combination of the historical financial information of Neogen and the Food Safety Business adjusted to give effect to the Transactions, including the Merger to be accounted for under the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”), in accordance with United States Generally Accepted Accounting Principles (‘‘U.S. GAAP”), with Neogen being considered the accounting acquirer of the Food Safety Business.  Under the acquisition method of accounting, the purchase price is allocated to the Food Safety Business’ identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair market values with any excess purchase price allocated to goodwill. The pro forma purchase price allocation is preliminary and was based on an estimate of the fair market values of the tangible and intangible assets and liabilities related to the Food Safety Business.  Following the completion of the Transactions, Neogen expects to complete the purchase price allocation considering the appraisal of the Food Safety Business’ assets and liabilities at the level of detail necessary to finalize the required purchase price allocation.  The purchase price utilized in the allocation will be based on the closing price of Neogen’s common stock immediately prior to closing and cash transferred as part of the Transactions.  The final purchase price allocation will be different than that reflected in the preliminary pro forma purchase price allocation presented herein, and these differences could have a material impact on the accompanying unaudited condensed combined pro forma financial information and the future results of operations and financial results of the combined company.

The unaudited pro forma financial information has not been adjusted to give effect to certain expected financial benefits of the Transactions, such as tax savings, cost synergies or revenue enhancements, or the anticipated costs to achieve these benefits, including the cost of integration or restructuring activities. Neogen has elected not to present Management’s Adjustments and only presents Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information.

At the consummation of the Transactions, Neogen will enter into the Transition Arrangements with 3M and Garden SpinCo, pursuant to which various categories of services will be provided to the Food Safety Business for a period of time following consummation of the Transactions, until the applicable term for each service has expired or has otherwise been terminated. The costs for these services could in the aggregate be higher than the combination of Neogen’s current costs and those reflected in the historical combined financial statements of the Food Safety Business.

The pro forma adjustments are based upon available information and certain assumptions as described in the accompanying notes to the unaudited pro forma financial information, which management believes are reasonable under the circumstances. The unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what the actual combined financial information would have been if the Transactions and related financing actually occurred on the dates indicated, nor are they necessarily indicative of future combined results of operations or combined financial condition. If the proposed Transactions are completed, the actual adjustments to the consolidated financial statements of Neogen will depend on a number of factors and actual results may differ materially from the assumptions within the accompanying unaudited pro forma financial information.

3) PRESENTATION RECLASSIFICATION ADJUSTMENTS

Certain reclassifications have been made on a preliminary basis to the Food Safety Business historical balance sheet and historical income statements included within the unaudited pro forma condensed combined financial information to conform to the financial statement presentation of Neogen. The following tables indicate the reclassification and conforming adjustments made for the purpose of the unaudited pro forma condensed combined financial information included in this document.



Food Safety Business Condensed Combined Balance Sheet Reclassifications
As of June 30, 2022
(in USD thousands)

   
Historical Food Safety Business
   
Reclassification Adjustments
   
Notes
   
Historical Food Safety Business after Reclassification Adjustments
 
Assets
                       
Current assets:
                       
Accounts receivable
 
$
51,686
   
$
-
         
$
51,686
 
Inventories
   
37,703
     
-
           
37,703
 
Prepaid expenses and other current assets
   
5,206
     
-
           
5,206
 
Total current assets
   
94,595
     
-
           
94,595
 
                               
Property, plant and equipment
   
21,761
     
-
           
21,761
 
Right-of-use assets
   
1,012
     
-
           
1,012
 
Goodwill
   
79,983
     
-
           
79,983
 
Other intangible assets, net
   
2,934
     
-
           
2,934
 
Deferred tax assets
   
6,645
     
-
           
6,645
 
Other non-current assets
   
1,281
     
-
           
1,281
 
Total assets
 
$
208,211
     
-
         
$
208,211
 
                               
Liabilities and Shareholders’ Equity
                             
Current liabilities:
                             
Accounts payable
 
$
12,083
     
-
         
$
12,083
 
Accrued compensation
   
1,609
     
-
           
1,609
 
Operating lease liabilities - current
   
287
     
(287
)
    a

   
-
 
Other accruals
   
3,930
     
287
       a

   
4,217
 
Total current liabilities
   
17,909
     
-
             
17,909
 
                                 
Deferred income taxes
   
8
     
-
             
8
 
Other non-current liabilities
   
-
     
708
       b

   
708
 
Operating lease liabilities – non-current
   
708
     
(708
)
     b

   
-
 
Long-term debt
   
-
                         
Total liabilities
   
18,625
     
-
             
18,625
 
                                 
Shareholders’ equity:
                               
Common stock
   
-
     
-
             
-
 
Parent company net investment
   
237,984
     
-
             
237,984
 
Additional paid-in capital
   
-
     
-
             
-
 
Accumulated other comprehensive income (loss)
   
(48,398
)
    -
             
(48,398
)
Retained earnings
   
-
     
-
             
-
 
Total shareholders’ equity
   
189,586
     
-
             
189,586
 
Total liabilities and shareholders’ equity
 
$
208,211
     
-
           
$
208,211
 



Food Safety Business Condensed Combined Statement of Income Reclassifications
For the twelve months ended June 30, 2022
(in USD thousands)

   
Historical Food Safety Business
   
Reclassification Adjustments
    Notes    
Historical Food Safety Business after Reclassification Adjustments
 
Revenues
 
$
-
   
$
370,403
      d

 
$
370,403
 
Net sales
   
370,403
     
(370,403
)
     d

   
-
 
Cost of revenues
   
-
     
151,673
       d

   
151,673
 
Gross margin
   
370,403
     
(151,673
)
           
218,730
 
                                 
Operating Expenses
                               
Cost of sales
   
151,673
     
(151,673
)
     d

   
-
 
Sales and marketing
   
-
     
55,700
       c

   
55,700
 
General and administrative
   
-
     
29,205
       c

   
29,205
 
Selling, general and administrative
   
84,905
     
(84,905
)
     c

   
-
 
Research and development
   
-
     
25,324
       d

   
25,324
 
Research, development and related expenses
   
25,324
     
(25,324
)
     d

   
-
 
Total operating expenses (income)
   
261,902
     
(151,673
)
           
110,229
 
                                 
Income (loss) before taxes
   
108,501
     
-
             
108,501
 
                                 
Provision for income taxes
   
21,659
     
-
             
21,659
 
Net income (loss)
  $
 86,842    
-
     

   
$
86,842
 

Balance sheet items:

a)
Reflects a presentation conforming adjustment to reclassify operating lease liabilities – current, which is presented separately on the face of the Food Safety Business historical balance sheet to other accruals, as presented on the face of the Neogen historical balance sheet.

b)
Reflects a presentation conforming adjustment to reclassify operating lease liabilities – non-current, which is presented separately on the face of the Food Safety Business historical balance sheet to other non-current liabilities, as presented on the face of the Neogen historical balance sheet.

Statement of income items:

c)
Reflects a presentation conforming adjustment to reclassify sales and marketing expenses recorded in selling, general and administrative expenses in the Food Safety Business historical income statements that are presented separately on the face of the Neogen historical income statements.

d)
Reflects presentation conforming adjustments to reclassify certain line items of the historical Food Safety Business combined statement of income in conformity with the presentation of Neogen’s historical income statements such as net sales to revenues, cost of sales to cost of revenue and research, development and related expenses to research and development.

4) PRE-MERGER ADJUSTMENTS

In accordance with the Separation Agreement and Merger Agreement, there are certain transactions that are required to occur prior to the effective time of the Merger as well as certain assets that will not be acquired and certain liabilities that will not be assumed as part of the Merger. Therefore, the following adjustments are included in the unaudited pro forma condensed combined balance sheet and in the unaudited pro forma condensed combined statements of income to reflect the impact of inclusion or exclusion of these costs, assets and liabilities, as necessary:

a)
Debt

Prior to or substantially concurrently with the effective time of the Merger, Garden SpinCo and Neogen expect to transfer aggregate consideration to 3M valued at $1,000.0 million as adjusted by certain items provided under the Separation Agreement. Garden SpinCo and Neogen are expected to finance the transfer through the issuance by Garden SpinCo of $1,000.0 million of newly issued debt (the “Neogen Debt”) which, pursuant to ASC 805, will be treated as consideration transferred by Neogen in the Merger.



The Neogen Debt is assumed to consist of (i) the Notes in the aggregate amount of $350.0 million with maturities of 8 years bearing interest at the rate of 8.625% per annum, and (ii) 5-year senior secured term loans under a term loan facility of up to $650.0 million bearing interest at the secured overnight financing rate (“SOFR”) plus a term premium (the “Term Loan Facility”) (collectively “Permanent Financing”). On December 13, 2021, Garden SpinCo entered into a debt commitment letter with JPMorgan Chase Bank, N.A. and Goldman Sachs Bank USA to provide Garden SpinCo up to $1,000.0 million under a 364-day senior secured bridge facility, which would be made available to Garden SpinCo if the Permanent Financing is unavailable on or prior to the date of the consideration described above is transferred to 3M. In connection with Garden SpinCo’s entry into the Credit Agreement, dated June 30, 2022, among Garden SpinCo, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent, Garden SpinCo terminated $650.0 million in aggregate principal amount of the commitments under the bridge facility. On July 20, 2022, the remaining commitments under the bridge facility were terminated. Debt issuance costs of $13.3 million that have been or are expected to be incurred for the Permanent Financing will be amortized over the respective terms of the debt and financing fees of $7.5 million ($5.9 million, net of tax), that have been incurred for the bridge facility will be expensed as incurred.

The following pro forma adjustments have been recorded in the unaudited pro forma condensed combined balance sheet in relation to the Permanent Financing:

     
As of May 31, 2022
 
 
Notes
   
350,000
 
 
Term Loan Facility
   
650,000
 
 
Debt issuance costs
   
(13,312
)
 
Pro forma adjustments to long-term debt
   
986,688
 

These agreements, assumptions and expectations are subject to change and the debt issuance cost to be incurred, and related interest expense could vary significantly from what is assumed in the unaudited pro forma condensed combined financial information. Other factors that are subject to change include, but are not limited to, the timing of borrowings, the amount of cash on hand at the time of the closing and inputs to interest rate determination on debt instruments issued.

b)
Reflects a net decrease of $157.5 million to specifically excluded net working capital balances, tax related assets and liabilities, property, plant and equipment and intangible assets as of May 31, 2022 that will not be transferred to Neogen as part of the Merger as provided in the Separation Agreement and the Asset Purchase Agreement, consisting of $51.7 million of accounts receivable, $26.0 million of inventories, $5.2 million of prepaid expenses and other current assets, $2.6 million of property, plant and equipment, $80.0 million of goodwill, $2.9 million of other intangible assets, $6.7 million of deferred tax assets – non-current, $12.1 million of accounts payable, $1.6 million of accrued compensation, $3.9 million of other accruals and $0.01 million in deferred income taxes, with a corresponding decrease to parent company net investment.

Further, an adjustment of $0.7 million was made to general and administrative expenses to reflect the corresponding impact to depreciation expense on the decrease of property, plant, and equipment.

c)
Reflects an adjustment of $2.3 million to cost of revenues for royalties related to products that will continue to be paid by 3M after the Merger.

Management is currently in the process of assessing the impact of various other separation related items as described in the Separation Agreement on the unaudited pro forma condensed combined financial information and therefore no pro forma adjustment has been included with regards to such items as such amounts are not currently estimable or factually supportable.



5) ESTIMATED PRELIMINARY PURCHASE ALLOCATION

The unaudited pro forma combined financial information includes various assumptions, including those related to the preliminary purchase price allocation of the assets acquired and liabilities assumed of the Food Safety Business based on management’s best estimates of fair value. The final purchase price allocation may vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumed liabilities.

The following table represents the preliminary estimate of the purchase price allocation in the Merger (in USD thousands, except share and per share data):

Purchase Price Allocation

Estimated number of shares of Neogen common stock issued and outstanding
   
107,837,730
 
Share issuance ratio(i)
   
1.00400802
 
Estimated number of shares to be issued to 3M stockholders
   
108,269,946
 
Neogen common stock price(ii)
 
$
21.56
 
Estimated fair value of equity shares to be issued
 
$
2,334,300
 
Aggregate consideration to 3M(iii)
   
1,000,000
 
Estimated net working capital adjustment
   
(55,021
)
Estimated fair value of long-term incentive (“LTI”) replacement awards
   
598
 
Estimated total Merger Consideration(iv)
 
$
3,279,877
 
         
Recognized amounts of identifiable assets acquired and liabilities assumed
       
Net book value of the Food Safety Business historical balance sheet
 
$
189,586
 
Less: Pre-Merger adjustments of net assets acquired as of May 31, 2022
   
(157,504
)
Net book value of net assets acquired as of May 31, 2022
   
32,082
 
Adjustments to fair value:
       
Increase in inventories
   
3,014
 
Identifiable intangible assets
   
2,600,000
 
Deferred tax liabilities
   
(546,000
)
Total Goodwill
 
$
1,190,781
 


i.
The number of shares of Neogen common stock to be issued is equal to the greater of (x) 108,185,928 or (y) the product of (i) the number of shares of Neogen Common Stock issued and outstanding immediately prior to the effective time of the Merger multiplied by (ii) 1.00400802.


ii.
Represents Neogen’s stock price as of August 4, 2022.


iii.
Represents the sum total of (a) an amount of cash (not to be less than $465 million) determined in accordance with the Separation Agreement, (b) $181.6 million in cash payable by Neogen to 3M pursuant to the Asset Purchase Agreement plus the amount of cash paid in consideration of any other separately conveyed assets and (c) an aggregate principal amount of Garden SpinCo debt securities equal to $1,000 million (plus or minus any applicable working capital adjustment determined in accordance with the Separation Agreement) minus the amounts paid pursuant to the foregoing clauses (a) and (b).


iv.
The Merger Consideration will be determined, in part, based on the total number of shares of Neogen common stock that will be issued to former Garden SpinCo stockholders in the Merger. Because the Exchange Ratio in the Merger Agreement is fixed to result in the number of shares of Neogen common stock that will ultimately be issued in the Merger being equal to the number that will result in former Garden SpinCo stockholders holding, in the aggregate, 50.1% of the total number of shares of Neogen common stock issued and outstanding immediately following the Merger, the Merger Consideration is not expected to be impacted by whether or not 3M elects to distribute the Garden SpinCo common stock to 3M stockholders in a pro rata spin-off or an Exchange Offer (including any Clean-Up Spin-Off).

The Merger Consideration will depend on the market price of Neogen’s common stock when the Merger is completed. The respective equity and cash components of the Merger Consideration will be contingent on the number of shares held by third parties and the number of LTI replacement awards on the closing date of the Merger. Neogen believes that a 10% fluctuation in the market price of its common stock is reasonably possible based on historical volatility, and the potential effect on the Merger Consideration would be $233.4 million with a corresponding increase or decrease to goodwill.

Under the acquisition method of accounting, the Food Safety Business’ assets and liabilities will be recognized at fair value at the date of the completion of the Merger and combined with the historical carrying amounts of the assets and liabilities of Neogen. The pro forma purchase price allocation presented above has been developed based on preliminary estimates of the fair values of the assets acquired and liabilities assumed, including estimates of the fair value of inventories and identifiable intangible assets acquired.



There has been no determination as to the fair value of property, plant and equipment and operating lease right-of-use assets based on information received to date. As such, the historical carrying value has been used in the preliminary purchase price allocation reflected in the unaudited pro forma consolidated balance sheet as of May 31, 2022. No adjustment was made to the unaudited pro forma consolidated statements of income, but any difference between the fair value and the historical carrying value would have a direct impact to future earnings through depreciation expense.

Goodwill is calculated as the difference between the acquisition date fair value of the merger consideration expected to be transferred and the preliminary values assigned to the assets acquired and liabilities assumed.  Goodwill is not amortized and is not deductible for tax purposes. Goodwill could materially change based on changes in estimates in the fair value of the assets acquired and liabilities assumed.

The estimated values of the assets acquired and liabilities assumed will remain preliminary until after the closing of the Merger, at which time Neogen will determine the fair values of assets acquired and liabilities assumed. The final determination of the purchase price allocation is anticipated to be completed as soon as practicable after completion of the Merger and will be based on the fair values of the assets acquired and liabilities assumed as of the Merger closing date. The final amounts allocated to assets acquired and liabilities assumed could differ materially from the amounts presented.

6) MERGER ADJUSTMENTS

The pro forma adjustments are based on Neogen’s preliminary estimates and assumptions of the Food Safety Business that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:

Adjustments to the pro forma condensed combined balance sheet

a)
Cash and cash equivalents

Reflects the pro forma adjustment to cash representing the sources and uses of cash as if the Transactions had occurred on May 31, 2022, as follows (in USD thousands):

        
  Sources of Funds
      Uses of Funds
 
Term Loan Facility 
 
$
650,000
 
Merger consideration(i)
 
$
(55,021
)
 
Senior unsecured notes
   
350,000
 
Cash consideration to 3M(ii)
   
1,000,000
 
 
       
Estimated transaction fees and expenses(iii)
   
54,984
 
 
Total sources
 
$
1,000,000
 
   Total uses
 
$
999,963
 


i.
Represents the estimated cash consideration received from 3M as a result of the net working capital payment adjustment as included in the Separation Agreement.


ii.
Represents aggregate consideration to 3M valued at $1,000.0 million, based on the sum total of (a) an amount of cash (not to be less than $465 million)  determined in accordance with the Separation Agreement, (b) $181.6 million in cash payable by Neogen to 3M pursuant to the Asset Purchase Agreement plus the amount of cash paid in consideration of any other separately conveyed assets and (c) an aggregate principal amount of Garden SpinCo debt securities equal to $1,000.0 million minus the amounts paid pursuant to the foregoing clauses (a) and (b) minus the net working capital adjustment pursuant to the foregoing clause ii.


iii.
Represents the estimated fees and expenses associated with the Transactions in the aggregate amount of approximately $55.0 million, including advisory fees and other transaction costs and professional fees of which $11.4 million has already been recognized as of May 31, 2022 in the historical consolidated financial statements of Neogen.



The sources and uses of cash have been presented net in cash and cash equivalents in the unaudited pro forma condensed combined balance sheet. The net amount of $0.04 million is an increase to the working capital of Neogen.

b)
Inventories

Reflects an increase of $3.0 million to the carrying value of the Food Safety Business’ inventory to adjust it to its preliminary estimated fair value based on the estimated selling price of the inventory less a normal profit margin.

c)
Intangible assets

Reflects the identifiable intangible assets in the amount of $2,600.0 million, which represent trade name, customer relationships and developed technology acquired at the close of the Transactions. The fair values of the identifiable intangible assets acquired are based on preliminary estimates using assumptions that are believed to be reasonable and based on information that is currently available.  A full valuation will be completed upon the Merger and differences between these preliminary estimates and the final acquisition accounting will occur, and these differences could have a material impact on the unaudited pro forma condensed combined financial information.

d)
Deferred tax liabilities

Reflects an increase to deferred tax liabilities in the amount of $546.0 million primarily related to the calculated tax effect of the fair value adjustments for non-deductible intangible assets, using the U.S. statutory tax rate of 21.0%. The intangible value may be allocated to countries with tax rates that differ from 21.0% and these differences could have a material impact on the unaudited pro forma condensed combined financial information.

e)
Total equity

Adjustments to equity reflect a net increase in the amount of $2,268.4 million, consisting of:


i.
an increase in equity to reflect the non-cash estimated share consideration issued by Neogen in the amount of $2,334.3 million of which $17.3 million of equity was issued at par value and $2,317.0 million of equity was issued in excess of par value and $0.6 million of non-cash equity consideration from the fair value of LTI replacement awards;


ii.
a decrease in equity to reflect the elimination of the Food Safety Business’ historical equity of $80.5 million after the adjustment related to the exclusion of $157.5 million in certain assets and liabilities that will not be transferred as part of the Merger;


iii.
an increase in equity to reflect the elimination of the Food Safety Business’ historical accumulated other comprehensive income (loss) of $48.4 million; and


iv.
a decrease in retained earnings of $34.4 million, net of tax, to reflect the additional transaction costs incurred.

Adjustments to the pro forma condensed combined statements of income

f)
Cost of revenues

Reflects an increase to cost of revenues in the amount of $3.0 million related to the fair value adjustment in inventories that is expected to be sold within one year of the acquisition date as well as the service fee related to the contract manufacturing services for certain products that is expected to be provided by 3M under the terms of the Transition Contract Manufacturing Agreement to be entered into among 3M, Neogen and Garden SpinCo in the amount of $7.6 million.



g)
General and administrative

Adjustments to general and administrative, which are detailed further down below, increase expense by $217.2 million consisting of a $173.3 million adjustment for non-cash amortization of intangible assets, $43.6 million of additional estimated fees and expenses associated with the Transactions and $0.3 million of additional non-cash stock-based compensation expense associated with the incremental fair value of the unvested LTI awards replaced on the closing date of the Merger.


i.
Amortization of intangible assets

The following table summarizes the estimated fair values of the Food Safety Business’ identifiable intangible assets and their estimated useful lives and amortization expense based on a straight-line method:

     
Estimated
fair value
 
Estimated
useful life
(in years)
 
Amortization
expense for
the year ended May 31, 2022
 
 
Finite lived intangible assets
             
 
Trade Names
   
400,000
 
10-20 years
   
26,666
 
 
Customer Relationships
   
1,800,000
 
10-20 years
   
120,000
 
 
Developed Technology
   
400,000
 
5-25 years
   
26,667
 
 
Pro forma adjustment
   
2,600,000
       
173,333
 

A 10% change in the valuation of intangible assets would cause corresponding increases or decreases in the balance of goodwill and deferred taxes and would also cause a corresponding increase or decrease in the amortization expense by approximately $17.3 million.


ii.
Transaction fees and expenses

Represents the additional estimated non-recurring fees and expenses to be incurred associated with the Transactions in the aggregate amount of approximately $43.6 million, including advisory fees, professional fees and other transaction related costs.


iii.
Stock based compensation

Represents the additional estimated expenses associated with the incremental fair value of the unvested LTI awards replaced on the closing date of the Merger in the amount of $0.3 million.


iv.
Transition Arrangements

The Food Safety Business historical income statements include general corporate expenses and shared expenses of 3M that were historically incurred by or charged to the Food Safety Business for certain support functions that are provided on a centralized basis, such as expenses related to information technology, finance and controlling, human resources, sales and marketing, and use of shared assets.  These expenses have been allocated to the Food Safety Business based on direct usage or benefit where available, with the remainder allocated pro-rata based on revenue or other activity-based measures.  Management of the Food Safety Business consider these allocations to be an overall reasonable reflection of the utilization of services by, or the benefits provided to, the Food Safety Business, in the aggregate.  The allocations may not, however, reflect the expenses the Food Safety Business would have incurred as a standalone company for the periods presented.  Following the Transactions, certain functions such as information technology and infrastructure will be performed by Neogen and/or third-party service providers. For an interim period, however, some of these functions will continue to be provided by 3M under certain Transition Arrangements. Neogen may be unable to replace these services in a timely manner or on terms and conditions as favorable as those the Food Safety Business currently receives from 3M. The costs for these services could in the aggregate be higher than the combination of Neogen’s current costs and those reflected in the Food Safety Business historical income statements.



The distribution agreement to be entered into between 3M and Garden SpinCo provides for Garden SpinCo, which will be a subsidiary of Neogen, to manufacture and supply certain products to 3M following the closing of the Transactions (the “Closing”), and for 3M to distribute and resell such products (on a non-exclusive basis) for use in certain healthcare applications or to certain existing customers of 3M’s other divisions (other than the Food Safety Business) pursuant to existing contracts. Neogen has not reflected a transaction accounting adjustment within the unaudited pro forma condensed combined financial information for this agreement because the consideration that will be exchanged under the agreement is not readily determinable and so any adjustment would not be factually supportable. Neogen made such determination because (i) 3M will not be required to purchase any products from Garden SpinCo pursuant to the agreement and any products ultimately purchased under the agreement will be contingent on the execution of purchase orders by 3M, (ii) the amount of any revenue that may be received by Neogen for products sold under the agreement will be dependent on the volume and type of products that are ultimately purchased for resale by 3M, and (iii) to the extent that 3M sells any products purchased under the agreement to any end customer, the amount of the distribution fee that Neogen will be required to pay to 3M under the agreement will be determined based on the weighted average sales price for the types of products that are ultimately sold, which prices have not yet been determined. The parties do not expect that an accounting adjustment will become determinable prior to the Closing.

h)
Finance expense

Reflects a net increase in incremental interest expense, calculated using the simple interest rate method, of $67.0 million related to the Permanent Financing based on the weighted-average interest rate of approximately 5.76% including the non-cash amortization of the debt issuance costs and financing fees for the bridge facility.

For each increase or decrease in interest rates of 0.125% related to the assumed $650.0 million Term Loan Facility to be issued on a pro forma basis as part of the Transactions, annual interest expense would increase or decrease by approximately $0.8 million.

i)
Income tax expense

Reflects the calculated tax effect of the pro forma adjustments at an estimated pro forma effective tax rate of 19.8% based on the weighted average statutory tax rate of the jurisdictions expected to be impacted for the period. The effective tax rates for pro forma purposes have been determined without consideration of possible limitations on utilizing net operating losses and interest expense deductibility relating to the Tax Cuts and Jobs Act. The total effective tax rate of the combined company could also be significantly different depending on the post-Merger geographical mix of income and other factors. The actual tax effects of the Transactions will differ from the pro forma adjustments, and the differences may be material. The pro forma adjustments do not consider the impact of the changes to legislation due to the ongoing outbreak of the COVID-19 pandemic.

7) PRO FORMA LOSS PER SHARE

The pro forma loss per share of Neogen common stock has been calculated based on the estimated weighted average number of shares of Neogen’s common stock that would have been outstanding on a pro forma basis. The pro forma weighted average number of shares outstanding was derived using Neogen’s historical weighted average number of shares outstanding after giving effect to the preliminary estimated number of shares of Neogen common stock to be issued as part of purchase consideration calculated pursuant to the Merger Agreement. For the purposes of the pro forma loss per share calculations, the shares issued in connection with the Merger were considered issued and outstanding as of June 1, 2021. Pro forma loss per share calculations do not consider the dilutive impact of issuance of common stock to equity award holders from the exchanges of equity awards on the date of the Merger as such inclusion would be anti-dilutive, as well as any dilutive impact from stock options and restricted share units issued by Neogen. As a result of the pro forma net loss, the loss per share amounts excludes the dilutive impact of the 251,677 equity awards assumed to be exchanged on the date of the Merger as well as 336,000 shares for the dilutive impact of Neogen’s stock options and restricted share units. Per share information for the Food Safety Business is not presented because the Food Safety Business did not have outstanding capital stock since its historical combined financial statements have been prepared on a carve-out basis.



The following table presents the calculation of pro forma combined basic and diluted net loss per share of Neogen common stock (in thousands, except per share amounts):

     
Year ended
May 31,
2022
 
 
Pro forma net (loss) attributable to common stockholders
   
(98,832
)
 
Weighted average number of Neogen shares outstanding – basic
   
107,684
 
 
Neogen shares to be issued to 3M stockholders as part of purchase consideration
   
108,270
 
 
Pro forma weighted average number shares outstanding — basic and diluted
   
215,954
 
 
Pro forma net (loss) per share of common stock — basic and diluted
 
$
(0.46
)

Cautionary Note on Forward-Looking Statements

This document includes “forward-looking statements” as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including statements regarding the proposed transaction between Neogen, 3M and Garden SpinCo. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “target,” “endeavor,” “seek,” “predict,” “intend,” “strategy,” “plan,” “may,” “could,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. All statements, other than historical facts, including, but not limited to, statements regarding the expected timing and structure of the proposed transaction, the ability of the parties to complete the proposed transaction, the expected benefits of the proposed transaction, including future financial and operating results and strategic benefits, the tax consequences of the proposed transaction, and the combined Neogen-Garden SpinCo company’s plans, objectives, expectations and intentions, legal, economic and regulatory conditions, and any assumptions underlying any of the foregoing, are forward-looking statements.

These forward-looking statements are based on Neogen and 3M’s current expectations and are subject to risks and uncertainties, which may cause actual results to differ materially from Neogen and 3M’s current expectations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) that one or more closing conditions to the proposed transaction may not be satisfied or waived, on a timely basis or otherwise, including that the required approval by the shareholders of Neogen may not be obtained; (2) the risk that the proposed transaction may not be completed on the terms or in the timeframe expected by Neogen, 3M and Garden SpinCo, or at all; (3) unexpected costs, charges or expenses resulting from the proposed transaction; (4) uncertainty of the expected financial performance of the combined company following completion of the proposed transaction; (5) failure to realize the anticipated benefits of the proposed transaction, including as a result of delay in completing the proposed transaction or integrating the business of Neogen and the Food Safety Business, on the expected timeframe or at all; (6) the ability of the combined company to implement its business strategy; (7) difficulties and delays in the combined company achieving revenue and cost synergies; (8) inability of the combined company to retain and hire key personnel; (9) the occurrence of any event that could give rise to termination of the proposed transaction; (10) the risk that stockholder litigation in connection with the proposed transaction or other litigation, settlements or investigations may affect the timing or occurrence of the proposed transaction or result in significant costs of defense, indemnification and liability; (11) evolving legal, regulatory and tax regimes; (12) changes in general economic and/or industry specific conditions; (13) actions by third parties, including government agencies; (14) the risks that the anticipated tax treatment of the proposed transaction is not obtained; (15) the risk of greater than expected difficulty in separating the Food Safety Business from the other businesses of 3M; (16) risks related to the disruption of management time from ongoing business operations due to the pendency of the proposed transaction, or other effects of the pendency of the proposed transaction on the relationship of any of the parties to the proposed transaction with their employees, customers, suppliers, or other counterparties; and (17) risk factors detailed from time to time in Neogen’s and 3M’s reports filed with the SEC, including Neogen’s and 3M’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC, including the Neogen Registration Statement, which was declared effective by the SEC on August 4, 2022, Neogen’s definitive proxy statement on Schedule 14A with respect to the special meeting of Neogen shareholders in connection with the proposed transaction filed with the SEC on July 18. 2022, as amended and supplemented, and the Registration Statement on Form S-4 and S-1 (Reg. No. 333-263669) filed by Garden SpinCo in connection with the Transactions, which was declared effective by the SEC on August 4, 2022. The foregoing list of important factors is not exclusive.

Any forward-looking statements speak only as of the date of this communication. None of Neogen, 3M or Garden SpinCo undertakes, and each party expressly disclaims, any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.