Gatemore Capital Management LLP on Tuesday said it might be compelled to unite shareholders to seek a replacement for Elementis PLC’s chair shall the latter not respond to its calls to replace the current chief executive officer and conduct a strategic review.

Elementis is a London-based chemicals company, which manufactures ingredients for consumer and industrial products for a variety of industries.

Gatemore says it has a stake of 4.5 million shares in Elementis, or around 0.8% of issued shares.

Gatemore repeated its belief that that Elementis Chief Executive Officer Paul Waterman needed to be replaced, following its open letter published at the end of April.

Back in April, Gatemore, lamenting a ‘persistently weak share price’, said it believed ‘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.’

Further, on Tuesday, Gatemore said Elementis needed to accelerate the cost-savings programme and conduct a strategic review.

‘Since our open letter we have continued to engage with other active shareholders who closely

follow the company’s trajectory. We believe that the majority of top active shareholders share our

sentiment, are disappointed with the ineffective engagement from the company, and support the

actions we recommended in our letter,’ Gatemore said.

It noted that Elementis CEO Waterman at the end of May sold 350,000 shares, or about 18% of his total vested holding in the company for around £523,000, leaving him 1.6 million shares, or about 0.3% of the total shareholding.

‘This sale of shares by the CEO at such a critical time for Elementis is tone-deaf in the context of extensive cost cuts. Furthermore, it sends an extremely poor signal to shareholders on the CEO’s views on the future prospects of the business,’ Gatemore said.

Gatemore Managing Partner Liad Meidar said: ‘We have engaged with many of the largest active shareholders of Elementis and believe there is unity on all these issues. We strongly urge you and the board to take prompt and decisive action. Failing this, we may be compelled to unite the shareholders and pursue the replacement of the chairman through an extraordinary general meeting to drive the necessary change within Elementis.’

Elementis shares fell 0.4% to 148.00 pence each on Tuesday morning in London.

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