Johnson Matthey to spin off medical manufacturing arm for £550m

Chemicals specialist Johnson Matthey has spun off its Medical Device Components business to a private equity firm for over half a billion pounds.

According to a notice from the firm today, London-based Montagu Private Equity will take on the division, which makes components for medical device manufacturers, for $700m (£550m) cash.

The Medical Device Components business currently operates across manufacturing sites in the US, Mexico and Australia.

Johnson Matthew said it intends to return up to half of the cash back to investors through a share buyback programme and use the other half to pay off existing debts and other general corporate purposes.

The FTSE 250 firm added that today’s sale, along with a separate sale of its Battery Systems business in May last year, concludes its planned divestment plan to shore up the business’s future and takes the proceeds from strategic sales well over the firm’s initial target of £300m.

In 2021, the group also completed the £350m sell-off of its health division to Altaris Capital to focus on greener – and more lucrative – areas of business, including hydrogen technologies and the de-carbonisation of chemicals and fuels.

The proceeds from today’s sale will be payable in cash at the deal’s completion, which is expected to be in the third quarter of 2024, subject to regulatory approval.

Liam Condon, chief executive of Johnson Matthey, said the sale represents a “significant milestone” in the company’s corporate journey.

“As a Johnson Matthey business, Medical Device Components has delivered technological differentiation and good growth to the critical health sector and we welcome Montagu’s plans to continue the investment and growth plans for it,” the chief executive added.

Montagu has a strong recent history of deal-making, striking a 2022 deal with publishing giant Informa to buy up shipping newsletter Lloyd’s List, one of the world’s oldest continuously running news journals.