LONDON, UK: Johnson Matthey Plc (JM), a global leader in sustainable technologies, has entered into an agreement for the sale of its Health business to Altaris Capital Partners 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 30th September 2021.
Johnson Matthey’s health business is a global developer and manufacturer of specialist and complex active pharmaceutical ingredients for pharma and biotech customers.
Johnson Matthey will receive £150 million cash on completion and will retain approximately a 30% equity stake in the business. 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 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.”