Chemical giant Johnson Matthey is locked in a bitter legal battle against the US buyer of its former health care company
Chemical giant Johnson Matthey is embroiled in a bitter legal battle against the US buyer of its former health company, The Mail on Sunday can reveal.
A High Court scrap is emerging over the sale to New York investment fund Altaris Capital Partners for £325m.
The health division of the FTSE 100 company was renamed Veranova after the deal closed last May. However, the buyer was annoyed by parts of the agreement.
Johnson Matthey was formally notified of the claim last month.
The health division had approximately 1,000 employees at the time of the sale and had an annual turnover of £237 million.
Claim: Johnson Matthey intends to ‘vigorously defend his position’ after studying the allegations with his advisers
Johnson Matthey intends to “vigorously defend his position” after reviewing the allegations with his advisers.
The lawsuit is the most recent example of a US purchase of a UK company that has led to litigation. The disastrous takeover by Hewlett-Packard of software company Autonomy is the most high-profile example. It led to a massive fraud trial and criminal proceedings against founder Mike Lynch.
The full scope of the complaints against Johnson Matthey is not yet clear. Sebastian Bray, an analyst at Berenberg, said: “Profitability of Johnson Matthey’s health segment was under pressure in the years leading up to its divestment. In my opinion, the buyer would not make a claim unless he was dissatisfied with part of the acquired company.”
After acquiring Veranova, Altaris was forced three months ago to close a manufacturing facility in Annan, in southwest Scotland, one of the company’s three UK factories.
Niek Stapel, former CEO of Veranova, said that “every effort has been made” to avoid the closure, which put about 65 jobs at risk. It is not known if any part of the lawsuit relates to Annan’s closure.
Johnson Matthey recently reported a 7 per cent fall in revenue to £14.9 billion while complaining of a “challenging macroeconomic backdrop”. The share price has halved in the past five years. The 200-year-old company is now worth £3.1 billion.
The company has restructured its business in recent years after controversially exiting the electric car battery market in 2021. It scrapped nearly a decade of research and development on the project, claiming it had fallen too far behind competitors in China and Korea, who were already making batteries on a large scale.
The shock decision, which cost the company £314 million, led to a profit warning and the departure of CEO Robert MacLeod.
Johnson Matthey declined to comment. Altaris was also contacted.