Johnson Matthey is to transfer its medical device parts business for £550m
- It plans to use some of the proceeds from the sale for a £250m share buyback programme
- Johnson Matthey has also sold its battery materials and diagnostic services
Johnson Matthey will sell its medical device components division to Montagu Private Equity for $770m (£550m).
The catalytic converter manufacturer told investors it plans to spend the proceeds from the sale on a £250 million share buyback program to pay down debt and “other general corporate purposes.”
Chemicals giant Johnson Matthey said the sale meant it had completed a program announced in May 2022 to divest its “value business”.
Divestiture: Chemicals giant Johnson Matthey will sell its medical device components division to Montagu Private Equity for $770m (£550m)
Over the past two years, Johnson Matthey has sold its battery materials and diagnostic services businesses for a combined £105m, with the former acquired by EV Metals Group and the latter by Sullivan Street Partners.
It expects to complete the sale of its medical device parts sometime in the third quarter of this year.
The division produces precious metal alloys and nitinol from production sites in California, Mexico and Australia for companies in multiple countries.
Liam Condon, CEO of Johnson Matthey, said the sale of the division is “an important milestone in our divestment programme”.
He added that the program will “deliver benefits to Johnson Matthey shareholders in terms of value realization, simplification and increased focus on our growth businesses, where JM has a proven ability to win.”
Johnson Matthey shares rose 8.6 percent to 1,854.5p in the early hours of Wednesday morning, making them by some distance the best gainer on the FTSE 100 Index.
However, they are still down about 41 percent over the past five years.
The company suffered a major blow in 2021 when it abandoned a pioneering battery program for electric cars due to significant competition from countries such as China and South Korea, where government support is much stronger.
At the time, the company had spent hundreds of millions and a decade of work on the project, amid increasing pressure from automakers to make cleaner vehicles, prompted in part by the coming ban on gasoline and diesel cars.
In the six months ended September, Johnson Matthey’s profits fell 58 per cent to £63m due to a fall in precious metals prices and rising impairments and net finance costs.
It also warned of an estimated ‘negative impact’ of £80 million on full-year business performance if precious metals prices were to remain at the same levels for the rest of the financial year.
“Although precious metals prices have stabilized recently, it remains difficult to predict how they will develop,” the company noted in November.