Johnson Matthey Plc (JM) has announced the sale of its Medical Device Components business (MDC) to Montagu Private Equity for a sum of $700 million. This transaction signifies a big step in JM’s broader divestment program and reflects its commitment to evolving its operational focus and maximizing shareholder value. As the global landscape continues to progress, Johnson Matthey remains committed in its goal of addressing pressing challenges through cutting-edge metals chemistry, positioning itself as a leader for positive change in a rapidly changing industry.
The Medical Device Components business specializes in the production of important components for medical device manufacturers globally, with a particular emphasis on precious metal alloys and nitinol. With manufacturing sites located in the USA, Mexico, and Australia, MDC serves a diverse clientele across the healthcare sector, providing necessary materials for a variety of medical devices, including nitinol metal tubing used in stents and metallic coatings. This decision aligns with Johnson Matthey’s aim to divest its “Value Businesses,” which also includes battery systems, diagnostic services, and advanced glass technologies. These businesses collectively generated 470 million euros in sales during Johnson Matthey’s 2023 fiscal year, reflecting the company’s commitment to optimizing its portfolio and focusing on core competencies.
Liam Condon, Chief Executive of Johnson Matthey, expressed optimism regarding the sale, highlighting the technological differentiation and growth that MDC has contributed to the health sector. Condon also welcomed Montagu’s commitment to continuing investment and growth initiatives within the MDC business, ensuring its continued success and development under new ownership. This sentiment is echoed in Montagu’s approach, as the private equity firm specializes in carve-out and first-time buyout investments, focusing on businesses with must-have products or services in structurally growing markets. Montagu’s expertise in healthcare, among other sectors, positions it well to drive further growth and innovation within the MDC business.
In alignment with its capital allocation policy, Johnson Matthey intends to utilize the net proceeds from the sale to benefit shareholders, with plans to allocate £250 million towards an on-market share buyback program, subject to completion. A portion of the proceeds will be allocated towards debt repayment and other general corporate purposes, further strengthening JM’s financial position and flexibility for future operations. This capital allocation strategy reflects JM’s commitment to delivering value to its shareholders while also prioritizing debt reduction and ensuring financial stability.
As the transaction progresses towards completion, expected around Q3 2024 pending regulatory approval, both Johnson Matthey and Montagu are poised to navigate this transition seamlessly, with a shared vision of driving innovation, growth, and value creation within the healthcare industry.. For Johnson Matthey, this divestment shows a strategic realignment and outlines its ongoing commitment to leveraging advanced metals chemistry to address global challenges and catalyze the transition towards a sustainable future. Through this transaction, Johnson Matthey aims to unlock value for its shareholders while positioning itself for continued success in its core growth businesses.