Johnson Matthey’s (JMAT) Shares Jumped 9.65% on $700m MDC Sale

The Johnson Matthey PLC (LON: JMAT) share price jumped 9.65% after officially announcing the execution of a final agreement to divest its Medical Device Components (MDC) division to Montagu Private Equity (Montagu). The transaction is valued at $700 million (£550 million), arranged on a cash-free and debt-free basis.

The MDC division is recognised for its production of components utilised by global manufacturers of medical devices, specialising in the use of precious metal alloys and nitinol. This sector of JM’s operations has an international clientele and oversees manufacturing facilities in diverse locations: San Diego in the USA, Mexicali in Mexico, and Tullamarine in Australia.

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This divestiture, along with the prior sale of the Battery Systems business, marks the completion of JM’s strategic divestment initiative for its Value Businesses, a plan initially outlined in May 2022 to reshape the company’s portfolio to focus on core growth areas. The cumulative proceeds from these sales have substantially exceeded the initial goal of £300 million, highlighting the successful execution of this strategy.

Consistent with its capital allocation strategy, JM’s board intends to redistribute £250 million of the net proceeds from the MDC sale to its shareholders through an on-market share buyback program. This action is contingent upon the finalisation of the sale. The remaining proceeds will reduce JM’s existing debt and support various general corporate activities.

The financial compensation for this transaction will be delivered in cash upon the deal’s closure, pending the satisfaction of regulatory approvals. The expected timeframe for its completion is around the third quarter of 2024, marking a significant step in Johnson Matthey’s strategic realignment and capital management efforts.

Johnson Matthey’s CEO Liam Condon commented: “Today’s announcement represents a significant milestone in our disposals programme announced in May 2022. As a JM business, MDC has delivered technological differentiation and good growth to the critical health sector. We welcome Montagu’s plans to continue the investment and growth plans at MDC. 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.”

Johnson Matthey share price. 

The Johnson Matthey (JMAT) share price jumped 9.65% to trade at 1869.5p from Tuesday’s closing price of 1705.0p.