20th Mar 2024 13:02
(Alliance News) - Johnson Matthey PLC achieved a better-than-expected price for its Medical Device Components business, analysts said on Wednesday
Johnson Matthey shares were up 8.4% to 1,850.50 pence each on Wednesday afternoon in London.
The London-based chemicals maker said it had sold the business to Montagu Private Equity LLP, with the proceeds to fund a share buyback.
Johnson Matthey said the disposal for USD700 million in cash is expected to complete around the third quarter of 2024.
Johnson Matthey said it will return GBP250 million of that sum to shareholders by means of a share buyback. The balance will be used to repay some existing debt and for other general corporate purposes.
Johnson Matthey Chief Executive Officer Liam Condon said: "We are pleased that this concludes our 'value businesses' disposal programme which will deliver benefits to JM shareholders in terms of value realisation, simplification and increased focus on our growth businesses, where JM has a proven ability to win."
Analysts at Jefferies noted the proceeds are around GBP2 per share above its sum-of-the-parts value, which represents 12% upside to the share price.
Jefferies estimated net debt compared to earnings before interest, tax, depreciation and amortisation would be 1.2 times, assuming the deal closes in 2024, towards the bottom of a target range of 1.0 to 2.0 times.
Lacie Midgley at Panmure Gordon explained the sale completes the divestment programme of 'value' businesses originally announced in May 2022.
This was a "key strategic objective", Midgley pointed out.
Midgley highlighted that the aggregate net proceeds of the programme will be "significantly" more than the original GBP300 million target.
By Jeremy Cutler, Alliance News reporter
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