- Franklin Mutual Advisers’ clients hold 9.8% stake
- Odyssean Capital holds 3.5% stake
- Elementis board says sale not in shareholder interest
Shares in Elementis (ELM) were down nearly 2% to 121p in morning trading as another unhappy shareholder Odyssean Capital called for the specialist chemicals company to be put up for sale.
Today’s share price fall is in stark contrast to yesterday (20 September) when it was one of the biggest gainers on the FTSE 250 index, closing up 10% after Elementis’ board rebuffed calls for an immediate sale of the company saying it didn’t consider it to ‘be in the best interests of its shareholders.’
Stuart Widdowson managing partner of Odyssean Capital - which has a 3.5% stake in Elementis said: ‘We believe that Elementis is a higher quality company with some unique and valuable assets and believe that the rating of its shares has failed to reflect these attributes for some time.
‘The company robustly defended the bid approaches three years ago and shareholders gave the board and executives the chance to demonstrate their ability to add value as an independent company.
‘We suspect that other shareholders share many of the frustrations, views and sentiments expressed by Franklin, who are hardly well known as activists.
‘It seems like the shareholders’ patience has run out and maybe it’s time for someone else or some other corporate to have a go at unlocking the value that sits within the company.’
FRANKLIN MUTUAL ADVISERS ‘DISAPPOINTED’
Widdowson’s comments came after one of Elementis’ biggest shareholders Franklin Mutual Advisers -which holds a 9.8% stake on behalf of its clients since December 2020 - said the specialist chemicals company should ‘immediately and publicly announce a sale process’.
In the public letter to the chair of the board of directors of Elementis Franklin Mutual Advisers said: ‘The company’s capital allocation decisions have contributed to an extremely disappointing degradation in the share price.
‘Specifically, the company spent $860 million to acquire SummitReheis and Mondo Minerals in 2017 and 2018, respectively. Subsequently, the company has incurred over $200 million in impairments associated with the Mondo Minerals acquisition.
‘Since 2016, the stock price has declined by more than 50% and the company's current market value is less than the amount spent to acquire these two companies.
‘This is a shocking amount of shareholder value destruction.’
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