Johnson Matthey PLC (LSE:JMAT) shares have rallied 6% after it revealed plans to launch a £250 million share buyback after agreeing to sell its medical device components business to a private equity firm.
Montagu Private Equity will pay £550 million on a cash-free debt-free basis for the FTSE 250 firm’s division, a company update revealed.
Alongside the share buyback programme, the rest of the proceeds will be used to pay down debt and support corporate operations.
Like its core catalytic converter arm and hydrogen unit, the group’s medical device business manufactures components with a focus on precious metal alloys and nitinol.
The sale of the division, which has manufacturing sites in San Diego, Mexicali in Mexico, and Tullamarine in Australia, is expected to be completed by the third quarter of 2024.
Wednesday’s announcement concludes Johnson Matthey’s plan to divest non-core businesses, with sales having also occurred for its battery systems business and its diagnostic services unit.
Net proceeds of these sales have significantly outweighed the group’s initial target.