Johnson Matthey to offload medical device components business to Montagu Private Equity for $700m

Johnson Matthey Plc (JM), a leader in sustainable technologies, has finalized the sale of its Medical Device Components (MDC) business to Montagu Private Equity (Montagu) for a cash consideration of $700 million (£550 million) on a cash-free, debt-free basis. This decisive move is part of JM’s strategic plan to streamline its operations and focus on core growth areas, marking a significant step in the company’s ongoing divestment program which began in May 2022.

The MDC business, known for its production of high-precision components made from precious metal alloys and nitinol, operates manufacturing sites across the USA, Mexico, and Australia. This divestiture, along with the sale of the Battery Systems business, concludes JM’s divestment program for its Value Businesses, surpassing the initial target of £300 million in net proceeds.

In alignment with its capital allocation policy, JM plans to return £250 million of the net proceeds from the MDC sale to its shareholders through an on-market share buyback program, contingent upon the transaction’s completion. The remainder of the proceeds will be allocated towards reducing JM’s existing debt and for general corporate purposes.

Liam Condon, Chief Executive of Johnson Matthey, expressed his satisfaction with the transaction, emphasizing MDC’s contribution to the health sector and its growth potential under Montagu’s ownership. Condon also highlighted the benefits of the disposal program, including value realization and a sharpened focus on JM’s growth businesses.

MDC has carved a niche for itself by developing and manufacturing components for minimally invasive medical devices, serving high-growth clinical specialties. Its expertise in the metallurgy and micro-machining of Platinum Group Metals and Nitinol positions MDC as a vital player in its market, supporting blue-chip customers in driving innovation and improving patient outcomes.

Post-transaction, MDC will continue to operate as an independent entity under its current management team. MDC Chief Executive Don Freeman and Adrien Sassi, Partner at Montagu, shared their enthusiasm for the partnership, outlining their ambitious plans for the business’s growth through organic expansion and mergers and acquisitions.

The transaction is subject to regulatory approvals and customary closing conditions, with completion anticipated around Q3 2024. This sale marks Montagu’s second carve-out transaction announcement in three months, demonstrating the firm’s commitment to investing in healthcare and medical devices sectors.

The sale of the Medical Device Components business by Johnson Matthey to Montagu Private Equity represents a strategic realignment of JM’s portfolio towards its core competencies, allowing the company to enhance its focus on areas of growth. For Montagu, this acquisition fits perfectly with its strategy of investing in companies with unique capabilities and growth potential in the healthcare sector. This transaction not only underscores the value of specialized medical device components in the market but also highlights the continued interest of private equity in the healthcare industry.