Specialty chemicals and sustainable solutions supplier Johnson Matthey (JM) is preparing to shed its Health business to healthcare investment firm Altaris Capital Partners as it hones its focus on climate change solutions and other areas poised for growth.
“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 decarbonization of chemicals and fuels. The sale of Health is a further step towards simplifying our portfolio.,” JM Chief Executive Robert MacLeod said in a statement. “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.”
The business supplies specialist and complex active pharmaceutical ingredients to the pharmaceutical and biotech industries. Altaris plans to acquire the business for a total consideration of £325 million, JM announced in a December 17 release. Under the terms of the deal, JM will receive a cash payment of £150 million when the deal is completed and retain 30% of equity in the business.
If certain performance targets are hit in FY23 and FY24, JM will be paid an additional £50 million. Another £50 million will be set up as a vendor loan note, which will accrue interest of 8% per year until a future exit.
“We believe that our healthcare focus and experience in the pharmaceuticals sector will enable Altaris to be a good owner for Health going forward,” said George Aitken-Davies, managing director, Alatris, in the release. “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.”
The parties expect the sale to close in mid-2022.