Financial buyer for JM Health business

Johnson Matthey (JM) has agreed to sell the majority of its Health business to Altaris Capital Partners, an investment firm focused exclusively on the healthcare industry, for £325 million enterprise value, or 9.8 x EBITDA in the 12 months to 30 September 2021. Completion is anticipated in mid-2022, subject to regulatory approvals.

The JM board said that it carefully considered various factors in reaching its decision, notably that Health operates in different markets from the rest of the group and a strategic review concluded that it was not core. It also noted Altaris’ strong track record in growing businesses in healthcare, particularly pharmaceuticals.

“Since the firm’s founding in 2003, Altaris has completed 18 platform investments in businesses that develop, manufacture and transport complex medical products,” the board said. By retaining a minority stake of about 30%, “JM expects to realise significant additional future value as the business grows under Altaris’ majority ownership”. J

M will receive £150 million cash on completion, the same as the capital expenditure it planned for Health over the next three years. An additional £50 million will be contingent on the achievement of certain performance targets in the 2023 and 2024 fiscal years, while a further £50 million will be structured as a vendor loan note, deferred until a future exit.  

“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 decarbonisation of chemicals and fuels. The sale of Health is a further step towards simplifying our portfolio,” said outgoing CEO Robert Macleod (pictured).

The Health business has about 1,000 employees and seven development and manufacturing sites globally. In the year to 31 March 2021, it had sales of £237 million and underlying operating profit of £31 million, though 1H fiscal 2021 saw a fall to sales of £83 million and an underlying operating loss of £4 million.