- Talc business sold for $121 million
- New $50 million share buyback
- Full-year forecasts confirmed
Investors in specialty chemicals firm Elementis (ELM) were celebrating a double helping of good news on Monday as the firm announced the sale of its talc business and $50 million (£37 million) share buyback with part of the proceeds.
The shares jumped as much as 21p or 16% to 151p in early trading, taking them straight to the top of the FTSE 250 leader board, on heavy volume.
MORE STREAMLINED
The board of Elementis has been under pressure for over a year from activist shareholder Gatemore Capital which has been calling for a strategic review to invigorate the share price.
Today the firm announced it had agreed the sale of its talc business to Italian rival IMI Fabi for an enterprise value of $121 million (£89 million), generating net cash proceeds in the region of $55 million (£41 million).
The board said the sale represented ‘a key milestone in Elementis' repositioning as a pure-play specialty chemicals leader with a high-quality portfolio focused on value-added specialty additives in the high-margin Coatings and Personal Care markets’.
Given the strength of the company’s balance sheet and ‘strong confidence in the streamlined group’s prospects’, the majority of the sale proceeds will be returned to shareholders in the form of a share buyback.
NO CHANGE TO FORECASTS
The firm also took the opportunity to confirm the full-year forecasts it set out in its first-quarter trading update a month ago.
In the three months to March the company said it delivered a solid performance with higher margins and profits despite a ‘challenging demand environment’.
It also said it was ‘well-positioned’ to manage the potential impacts of the most recent US tariffs due to its global manufacturing footprint although the impact on future demand remained ‘highly uncertain’.
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