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

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

The catalytic converter maker told investors it plans to put the proceeds from the disposal towards a £250million share repurchase scheme, paying down debts, and ‘other general corporate purposes’.

Chemicals giant Johnson Matthey said the sale meant it had finished a programme announced in May 2022 to divest its ‘value businesses.’

Over the past two years, Johnson Matthey has offloaded its battery materials and diagnostic services companies for a combined £105million, 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 arm sometime during the third quarter of this year.

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

Liam Condon, chief executive of Johnson Matthey, said the division’s sale represents ‘a significant milestone in our disposals programme’.

He added that the programme ‘will deliver benefits to Johnson Matthey shareholders in terms of value realisation, simplification and increased focus on our growth businesses, where JM has a proven ability to win’.

Johnson Matthey shares jumped 8.6 per cent to 1,854.5p on early Wednesday morning, making them the FTSE 100 Index’s top riser by some distance.

However, they have still fallen by around 41 per cent over the past five years.

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

By that point, it had spent hundreds of millions and a decade of work on the project amid growing pressure from car manufacturers to make cleaner vehicles, partly prompted by incoming bans on petrol and diesel cars.

For the six months ending September, profits fell by 58 per cent to £63million due to a slump in precious metal prices and rising impairment and net finance charges.

It also warned of an estimated £80million ‘adverse impact’ to its full-year operating performance if precious metal prices remained at their same levels for the rest of the financial year.

‘Whilst precious metal prices have stabilised recently, it remains difficult to predict how they may develop,’ the business remarked in November.