Johnson Matthey faces court battle over £325m US deal

Chemicals giant Johnson Matthey embroiled in bitter legal battle against US buyer of its former health business

Chemicals giant Johnson Matthey is embroiled in a bitter legal battle against the US buyer of its former health business, The Mail on Sunday can reveal.

A High Court scrap is developing over the sale to New York investment fund Altaris Capital Partners for £325 million.

The FTSE 100 firm’s health division was renamed Veranova after the deal concluded last May. However, the buyer has been irked by parts of the agreement.

Johnson Matthey was formally notified of the claim last month.

The health division had around 1,000 employees at the time of the sale and boasted full-year revenues of £237 million.

Claim: Johnson Matthey plans to 'vigorously defend its position' after reviewing the allegations with its advisers

Claim: Johnson Matthey plans to ‘vigorously defend its position’ after reviewing the allegations with its advisers

Johnson Matthey plans to ‘vigorously defend its position’ after reviewing the allegations with its advisers.

The lawsuit is the latest example of a US purchase of a British business triggering lawsuits. Hewlett-Packard’s disastrous acquisition of software firm Autonomy is the most high-profile example. It led to a mammoth fraud trial and criminal proceedings against founder Mike Lynch.

The full extent of complaints against Johnson Matthey is not yet clear. Sebastian Bray, analyst at Berenberg, said: ‘The profitability of Johnson Matthey’s health segment had come under pressure in the years before it was divested. The buyer would not in my view be filing a claim unless it was unhappy with part of the acquired business.’

After taking over Veranova, Altaris was forced three months ago to shut a manufacturing facility in Annan, south-west Scotland – one of the firm’s three UK plants.

Niek Stapel, former chief executive of Veranova, said ‘every effort’ was made to avoid its closure, which put around 65 jobs at risk. It is not known if part of the lawsuit relates to the Annan shutdown.

Johnson Matthey recently reported a 7 per cent drop in revenue to £14.9 billion while complaining of a ‘challenging macro- economic backdrop’. Its share price has halved in the past five years. The 200-year-old firm is now worth £3.1 billion.

The company has been restructuring its operations in recent years after it controversially gave up on the electric car battery market in 2021. It scrapped almost a decade of research and development on the project, claiming it had fallen too far behind competitors in China and Korea which were already making batteries on a huge scale.

The shock decision, which cost the business £314 million, led to a profit warning and the exit of chief executive Robert MacLeod.

Johnson Matthey declined to comment. Altaris was also contacted.

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