Johnson Matthey hits back as activist investor ups pressure

Johnson Matthey insisted on Wednesday it remained "resolute" in its bid to improve shareholder value, as it responded to mounting pressure from US activist Standard Investments.

The New York-based investor wants the underperforming chemicals and specialist technologies group to shake up the board and launch a strategic review.

In a letter published this week - its second within a month to Patrick Thomas, Johnson Matthey’s chair - Standard said it would now seek support from fellow shareholders for its plans. Standard controls around 11% of the UK firm.

Co-chief executives David Millstone and David Winter said that Thomas’ response to their last letter, sent on Christmas Eve, was "wholly insufficient and does not adequately address the many serious issues…regarding Johnson Matthey’s significant destruction of shareholder value".

However, Johnson Matthey pushed back on Wednesday. It published its letter of the 24 Christmas, which unlike Standard’s open letters had been private, and reiterated its plans for the business.

In particular, it said: "The board and management team reiterate they are resolute in their focus on improving JM’s share price performance and delivering value for shareholders.

"JM is fully committed to driving enhanced performance, higher cash flow and stronger capital discipline."

It added that the business was "making progress in a challenging market environment through delivery of a comprehensive transformation strategy".

The former blue chip, which first announced plans to overhaul the business in 2022, has seen its share price slump in recent years. It has lost 18% over the last year alone and 54% over the last five.

It is currently in the process of selling off non-core businesses, as well as cutting jobs and shutting plants as it refocuses on the global energy transition.

In November, however, it posted another fall in sales and profits, which it blamed on the "challenging" macroeconomic climate.

Russ Mould, investment director at AJ Bell, said: "When an activist investor and its target are publishing correspondence publicly, you know relationships are particularly strained.

"The clock is ticking before Standard turns angry and makes tougher demands on the business. The board needs to either make a more convincing argument for the activist to back down or bow to its demands and enforce change.

"The market appears to have little faith in the current strategy, so might welcome [Standard] rallying the troops and getting the big shareholders on its side."

As at 1015 GMT, shares in the FTSE 250 firm - which traces its origins back to 1817 - were largely unchanged at 1,348p.