Elementis plc (LSE:ELM) shares rose 13% on Tuesday after the chemicals group sold its talc division for $121 million and announced plans to return $50 million to shareholders through a buyback.
The sale to Italian manufacturer IMI Fabi follows a strategic review and marks Elementis’ exit from the talc market, with new chief executive Luc van Ravenstein reiterating full-year guidance and expected to outline updated strategic plans later this year.
Analysts at Jefferies said it was "a positive and long-awaited" deal.
The sale was agreed at 12.6 times EBITA, which is a "significantly higher than the value we ascribed to the business", which had incorporated additional risk following the carcinogenic ruling on talc last year.
"This will improve earnings quality and, importantly, reduce a significant overhang for the equity story, which we believe has acted as a hindrance to investor interest."
The shares rose 16.9p to 146.9p.