Elementis plc (LSE:ELM) shares rose 6.2% to 161.2p after the speciality chemicals group completed the sale of its pharmaceutical manufacturing business to Associated British Foods PLC (LSE:ABF) and said it would return the proceeds to shareholders through a share buyback.
The company confirmed completion of the disposal for an enterprise value of €34.3 million ($39.8 million) and, after transaction costs, expects to receive net cash proceeds of about €30 million (roughly $35 million), all of which will be returned to shareholders via a share repurchase programme that is expected to begin as soon as practicable.
Elementis said the disposal leaves it a more focused speciality chemicals company centred on higher-margin additives markets, serving the personal care and coatings markets.
The disposal is also expected to improve adjusted operating margins both at group level and within its personal care division, while also reducing future capital requirements.
Chief executive Luc van Ravenstein said: "We are pleased to have completed the sale of the pharmaceutical manufacturing business. The Transaction further strengthens the quality of our portfolio and sharpens our focus on our core markets."
He added: "We are excited about the opportunities ahead and the positive momentum behind our Elevate Elementis strategy."
The board said the decision to return the proceeds reflected the group's strong balance sheet, robust first-quarter trading and unchanged outlook for the 2026 financial year.
Van Ravenstein said AB Foods was "the right home" for the business, citing its pharmaceutical platform and established customer relationships to support future growth.
AB Foods shares rose 2% to 1,853.5p.