Shares in chemical compounds producer Johnson Matthey have jumped by a fifth after a US industrial conglomerate purchased a stake within the struggling British firm, in a transfer that instantly prompted takeover hypothesis for one of many UK’s most venerable massive companies.
Shares within the firm, listed on London’s FTSE 250 index, soared by as a lot as 30% on Friday after a fund linked to New York-based Customary Industries took a 5% stake. Shares retreated to an 18% acquire at noon in London.
Johnson Matthey has a 205-year historical past in Britain’s chemical compounds sector, however it has struggled in recent times. In November, it deserted an effort to develop into a number one producer of batteries for electrical autos, to the dismay of the UK automotive trade.
The corporate’s roots return to testing valuable metals in 1817. It later turned one of many world’s important suppliers to the automotive trade as rising consciousness of air pollution dangers prompted the introduction of catalytic converters.
The catalytic converters enterprise made it into one among Britain’s largest firms, however it was demoted from the FTSE 100 index of blue chips in December after traders questioned what it will do when gross sales of autos with inside combustion engines are changed by electrical automobiles with no exhaust emissions.
Its share worth hit a excessive of £25 on Friday, its highest since November, however nonetheless nicely under the £30 to £35 ranges reached repeatedly since 2013, leaving it weak to a takeover.
Customary is a privately held conglomerate with pursuits in specialty chemical compounds, constructing supplies, property and investments. Final yr it purchased chemical compounds enterprise Grace. The fund that purchased the stake is managed by Customary’s co-chief executives.
The Johnson Matthey funding will in all probability improve scrutiny on chief govt Liam Condon, who solely began as Johnson Matthey’s chief govt in March after the retirement of Robert MacLeod. Condon is reviewing firm technique, and is scheduled to replace traders on 26 Could, however he has mentioned the corporate will in future deal with the chemical compounds wanted for “decarbonisation, hydrogen applied sciences and circularity”.
Condon can also be promoting the corporate’s enterprise offering specialist chemical compounds for pharmaceutical producers.
Charles Bentley, an fairness analyst at Jefferies, a US funding financial institution, mentioned Customary could be “one thing like a perfect proprietor for the JM enterprise”. A deal would supply “operational overlap” on the enterprise offering chemical catalysts to different producers, and “a capability to take a long-term view” on what to do with the cash from continued gross sales of catalytic converters for automobiles.
Johnson Matthey declined to remark. Customary Industries was approached for remark.