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Johnson Matthey PLC’s largest shareholder on Monday called for ‘decisive action’ to unlock the firm’s ‘unrealized promise’, and enable ‘significant’ value creation. Shares in Johnson Matthey were 4.4% higher at 1,411.00 pence each in London on Monday. Standard Investments, which holds a 11% stake in the London-based speciality chemicals firm, demanded a strategic review and a board overhaul and also recommended the sale of Johnson Matthey’s loss-making Hydrogen Technologies arm. The proposals from Standard Investments were contained in an open letter to Johnson Matthey Chair Patrick Thomas on Monday. A spokesperson for Johnson Matthey said the company is reviewing the letter and will issue a statement ‘shortly’. Standard Investments said it believes in the ‘unique value’ of Johnson Matthey and has directly engaged with the board and management regarding the many challenges facing the company. ‘Despite our patient and constructive approach, the board and management remain complacent and incapable of correcting a misguided strategy that has delivered sustained underperformance. This has created a massive credibility gap with investors and the broader market.’ The shareholder said significant capital has been spent over many years on ‘unproven growth businesses, with no demonstrated path to profitability.’ It said PGM Services is ‘opaque and continues to tremendously underperform’, while group-level free cash flow is ‘volatile and meagre’. ‘With the completion of divestitures for its non-core assets, investors see only a weak track record of group-level free cash flow generation,’ Standard Investments continued. Standard Investments called for ‘decisive action’. It urged management to refresh board, claiming the existing set-up ‘lacks the sense of urgency and strategic capabilities required to improve’ performance. ‘The board has failed to address the underperformance of the core businesses or hold management accountable,’ it added. ‘JM requires new voices on its board ready to take swift action and put a stop to the significant value destruction that the current board and management have presided over.’ Standard Investments said JM should ‘explore all opportunities to minimize further required investment in Hydrogen Technologies’, including ‘securing outside capital from a strategic or financial partner or exiting the business entirely through a sale.’ In addition, the firm should launch a formal, public strategic review process. ‘We strongly urge the board to hire advisors and publicly launch a formal strategic review process exploring all potential paths for maximizing shareholder value, including, but not limited to, a sale of part or all of the company,’ the letter said. Copyright 2024 Alliance News Ltd. All Rights Reserved.
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