Johnson Matthey (JMPLY) Sells Medical Device Unit for $700M
Johnson Matthey Plc JMPLY reached a definitive agreement to sell its Medical Device Components business (MDC) to Montagu Private Equity (Montagu) for $700 million (£550 million) in cash, with no associated debt.
MDC specializes in manufacturing components for medical device companies globally, with a particular emphasis on precious metal alloys and nitinol. Operating through its facilities in the United States (San Diego), Mexico (Mexicali) and Australia (Tullamarine), MDC serves a diverse international customer base.
With the announcement of MDC's sale, alongside the separate divestment of its Battery Systems business, Johnson Matthey completed its Value Businesses divestment program. It was initially disclosed in May 2022 as a strategic objective. Total net proceeds from divestments carried out by the company have surpassed the targeted £300 million. This disposal program for Value Businesses promises tangible benefits to shareholders through value realization, operational streamlining and a renewed focus on growth areas where Johnson Matthey has historically excelled.
Aligned with its capital allocation policy, JMPLY’s board plans to allocate £250 million of the net proceeds from the MDC sale to initiate an on-market share buyback program, subject to completion. The remaining proceeds will be utilized to repay a portion of Johnson Matthey's existing debt and for general corporate purposes. The cash proceeds from the sale will be distributed upon completion, which is subject to regulatory approvals. The deal is expected to close around the third quarter of 2024.
Recognized as a vital component of Johnson Matthey's portfolio, MDC exhibited technological excellence and substantial growth within the critical health sector.
In the past year, the stock has lost 4.6% against the industry’s 4% fall in the same period.
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Zacks Rank & Key Picks
Johnson Matthey currently carries a Zacks Rank #3 (Hold).
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