Johnson Matthey to offload medical device parts division for £550m

Johnson Matthey will sell its medical device components division to Montagu Private Equity for $770m (£550m).

The catalytic converter maker told investors it planned to use the proceeds from the sale towards a £250m share buyback programme, debt repayments and “other general corporate purposes”. ‘business “.

Chemical giant Johnson Matthey said the sale meant it had completed a program announced in May 2022 to divest its “valuable businesses”.

Over the past two years, Johnson Matthey has divested its battery materials and diagnostic services businesses for a total of £105m, with the former acquired by EV Metals Group and the latter by Sullivan Street Partners.

It plans to finalize the sale of its medical device parts business during the third quarter of this year.

The division produces precious metal alloys and nitinol from manufacturing sites in California, Mexico and Australia for companies in several countries.

Liam Condon, chief executive of Johnson Matthey, said the sale of the division represents “an important milestone in our disposal programme”.

He added that the program “will provide benefits to Johnson Matthey shareholders in terms of value realization, simplification and increased focus on our growing businesses, in which JM has proven its ability to win.”

Johnson Matthey shares jumped 8.6 per cent to 1,854.5p early Wednesday morning, making it by far the best riser on the FTSE 100 index.

However, they have still declined by around 41 percent over the past five years.

The company suffered a major blow in 2021 when it abandoned a pioneering electric car battery project due to significant competition from countries like China and South Korea, where government support is much stronger.

At that point, the company had spent hundreds of millions and a decade of work on the project, amid growing pressure from automakers to make cleaner vehicles, driven in part by looming bans on gasoline and diesel cars.

For the six months to September, profits fell 58 per cent to £63m due to falling precious metals prices and higher write-downs and net finance charges.

It also warned of an estimated £80 million “negative impact” on its operating performance for the full year if precious metals prices remained at their same levels for the remainder of the financial year.

“Even though precious metal prices have stabilized recently, it remains difficult to predict how they might evolve,” the company noted in November.