Yahoo Finance Johnson Matthey shares soar after US conglomerate buys stake
Shares in chemicals producer Johnson Matthey have jumped by a fifth after a US industrial conglomerate bought a stake in the struggling British company, in a move that immediately prompted takeover speculation for one of the UK’s most venerable large businesses.
Shares in the company, listed on London’s FTSE 250 index, soared by as much as 30% on Friday after a fund linked to New York-based Standard Industries took a 5% stake. Shares retreated to an 18% gain at midday in London.
Johnson Matthey has a 205-year history in Britain’s chemicals sector, but it has struggled in recent years. In November, it abandoned an effort to become a leading producer of batteries for electric vehicles, to the dismay of the UK automotive industry.
The company’s roots go back to testing precious metals in 1817. It later became one of the world’s main suppliers to the automotive industry as rising awareness of pollution risks prompted the introduction of catalytic converters.
The catalytic converters business made it into one of Britain’s biggest companies, but it was demoted from the FTSE 100 index of blue chips in December after investors questioned what it would do when sales of vehicles with internal combustion engines are replaced by electric cars with no exhaust emissions.
Its share price hit a high of £25 on Friday, its highest since November, but still well below the £30 to £35 levels reached regularly since 2013, leaving it vulnerable to a takeover.
Standard is a privately held conglomerate with interests in specialty chemicals, building materials, property and investments. Last year it bought chemicals business Grace. The fund that bought the stake is controlled by Standard’s co-chief executives.
The Johnson Matthey investment will probably increase scrutiny on chief executive Liam Condon, who only started as Johnson Matthey’s chief executive in March after the retirement of Robert MacLeod. Condon is reviewing company strategy, and is scheduled to update investors on 26 May, but he has said the company will in future focus on the chemicals needed for “decarbonisation, hydrogen technologies and circularity”.
Condon is also selling the company’s business providing specialist chemicals for pharmaceutical manufacturers.
Charles Bentley, an equity analyst at Jefferies, a US investment bank, said Standard would be “something like an ideal owner for the JM business”. A deal would offer “operational overlap” on the business providing chemical catalysts to other manufacturers, and “an ability to take a long-term view” on what to do with the money from continued sales of catalytic converters for cars.
Johnson Matthey declined to comment. Standard Industries was approached for comment.
