REG - Johnson Matthey PLC - Sale of Health

Johnson MattheyAnnouncement

17/12/2021 07:00

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RNS Number : 9641V  Johnson Matthey PLC  17 December 2021

17(th) December 2021

 

Johnson Matthey Plc

(the Company)

Johnson Matthey announces sale of Health

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

 ·             Johnson Matthey announces the sale of its Health business to Altaris Capital
               Partners, an investment firm focused exclusively on the healthcare industry,
               for £325 million enterprise value
 ·             Johnson Matthey will retain approximately a 30% equity stake from which it
               expects to realise significant additional future value
 ·             Completion anticipated in mid-2022

 Johnson Matthey Plc ("JM"), a global leader in sustainable technologies, today
 announces that it has entered into an agreement for the sale of its Health
 business to Altaris Capital Partners ("Altaris"), a leading healthcare
 investment firm.

 JM's Health business is a global developer and manufacturer of specialist and
 complex active pharmaceutical ingredients for pharma and biotech customers. JM
 announced a strategic review of the Health business in April 2021.

 Health will be sold for a total consideration of £325 million representing an
 implied transaction multiple of 9.8x underlying EBITDA of £33.0 million for
 the 12 months to 30(th) September 2021. JM will receive £150 million cash on
 completion and will retain approximately a 30%¹ equity stake in the business,
 from which we expect to realise significant additional future value under
 Altaris' management. An additional £50 million payment will be contingent on
 the achievement of certain performance targets in FY23 and FY24 and a further
 £50 million will be structured as a vendor loan note, which will be deferred
 until a future exit and will accrue interest at a rate of 8% per annum until
 this point, compounding quarterly.

 The board of JM carefully considered a number of factors in reaching its
 decision to sell Health. In particular:

 ·             Health operates in different markets from the rest of the Group and the
               strategic review concluded that it was not core to JM
 ·             Altaris has a strong track record in growing and driving value creation in
               businesses within the healthcare sector, and specifically within the
               pharmaceuticals sub-sector. Since the firm's founding in 2003, Altaris has
               completed 18 platform investments in businesses that develop, manufacture and
               transport complex medical products. Through retaining approximately 30%
               minority interest under the transaction structure, JM expects to realise
               significant additional future value as the business grows under Altaris'
               majority ownership
 ·             JM had planned c.£150 million of capital expenditure in Health over the next
               three years. A sale of the business will ensure that JM can redeploy this
               capital into scaling up its more attractive and higher returning growth
               businesses

 The sale is expected to give rise to an accounting loss on disposal/impairment
 of around £200 million. The transaction is subject to regulatory approvals
 and is expected to close in mid-2022.

 The use of proceeds when received in FY23, will be determined in line with our
 capital allocation policy and in the context of the strategic review to be
 carried out by the incoming Chief Executive, which will be communicated with
 the preliminary results in May 2022.

 Robert MacLeod, Chief Executive of JM, said:
 "As the world transitions to more sustainable technologies, we are focusing
 our portfolio on the most attractive growth areas, specifically businesses
 driving growth from climate change solutions - circularity solutions, hydrogen
 technologies and decarbonisation of chemicals and fuels. The sale of Health is
 a further step towards simplifying our portfolio.

 While Health has good long-term prospects, near term trading has been
 challenging, and the business requires significant capital investment. Health
 operates in different markets from the rest of JM, and we believe Altaris is
 the best partner to drive its future value."

 George Aitken-Davies, Managing Director of Altaris, said:
 "We believe that our healthcare focus and experience in the pharmaceuticals
 sector will enable Altaris to be a good owner for Health going forward.

 Moreover, we have previously completed 25 carveout and corporate partnership
 transactions, and understand the importance of providing continuity of
 operations and service to customers. We look forward to working with the
 Health team and to investing in the company to drive future growth and
 long-term value creation."

 About Altaris
 Altaris is a healthcare investment firm with an exclusive focus on building
 companies that deliver value to the healthcare system through innovation and
 efficiency. Altaris' operating companies are addressing some of the most
 complex problems in the healthcare industry, with the ultimate goal of
 improving access and outcomes for patients. Since inception in 2003, Altaris
 has invested in more than 45 healthcare companies that have contributed to
 advancements in the industry and generated significant value appreciation for
 investors. Altaris is headquartered in New York City and manages $6.0 billion
 of equity capital. For more information, please visit www.altariscap.com.

 About Health
 Health is a global leading developer and manufacturer of specialist and
 complex active pharmaceutical ingredients for pharma and biotech customers.
 Health has more than fifty years of experience, with long-standing and trusted
 customer relationships.

 Health has c.1,000 employees and seven development and manufacturing sites
 globally. In the year ended 31(st) March 2021, Health delivered sales of £237
 million and underlying operating profit of £31 million. As at 30(th)
 September 2021, Health had gross assets of £553 million. In H1 2021/22 Health
 delivered sales of £83 million and an underlying operating loss of £4
 million.

 About JM
 JM is a global leader in science that enables a cleaner and healthier world.
 With over 200 years of sustained commitment to innovation and technological
 breakthroughs, we improve the performance, function and safety of our
 customers' products. Our science has a global impact in areas such as low
 emission transport, pharmaceuticals, chemical processing and making the most
 efficient use of the planet's natural resources. Today more than 15,000
 Johnson Matthey professionals collaborate with our network of customers and
 partners to make a real difference to the world around us.

 Notes
 1.            Altaris' and JM's equity interests are approximately 70% and 30%. Altaris'
               equity interest includes the right to an 8% cumulative return in preference to
               JM's equity interest.

 The person responsible for the release of this announcement is Nick Cooper,
 General Counsel and Company Secretary of Johnson Matthey Plc.

 ENDS

 

 

 

 Enquiries:

 Investor Relations

 Martin Dunwoodie    Director of Investor Relations      +44 20 7269 8241

 Louise Curran       Senior Investor Relations Manager   +44 20 7269 8235

 Jane Crosby         Investor Relations Manager          +44 20 7269 8242

 Media

 Barney Wyld         Group Corporate Affairs Director    +44 7485 337498

 Harry Cameron       Tulchan Communications              +44 7799 152148

 

 

Johnson Matthey Plc is listed on the London Stock Exchange (JMAT)

Registered in England & Wales number: 00033774

Legal Entity Identifier number: 2138001AVBSD1HSC6Z10

 

 

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