Elementis PLC on Monday received an open letter from activist shareholder Gatemore Capital Management LLP, demanding the current chief executive officer to step down and a strategic review.
The London-based chemicals company, which manufacturers ingredients for consumer and industrial products for a variety of industries, faces calls from Gatemore to replace its current Chief Executive Officer Paul Waterman.
‘We believe that many of Elementis’ current problems are self-inflicted and demonstrate a continued failure of judgement of the company’s top leadership team, most notably the CEO,’ Gatemore said.
Gatemore, which holds a stake of around 0.7% in Elementis, lamented a ‘persistently weak share price’, adding that the company needed to rebuild investor confidence and unlock ‘significant’ value for its shareholders.
Elementis shares rose 1.0% to 138.60 pence each on Monday morning in London. The shares are 13% higher than a year ago, but 12% lower than five years ago.
Gatemore said since CEO Waterman came into office in 2016, the company ‘delivered subpar total shareholder returns as compared to its peers, despite the share price having been supported by three takeover approaches throughout the period,’ citing underperformance by 86 percentage points compared to its specialty chemicals peers and 76 percentage points compared to the FTSE 250.
Further, the investor alleged poor capital allocation, such as about $650 million having been spent on mergers & acquisitions net of disposals, worth over half of Elementis’s current entire market capitalisation.
Gatemore asked Elementis to conduct a strategic review of the portfolio aimed at refocusing the business to make it more attractive for a strategic buyer.
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