Johnson Matthey Expects Net GBP 150 Million Cash Charges on eLNO Exit; Shares Fairly Valued

Narrow-moat Johnson Matthey provided an update on its exit plan for its eLNO battery materials business. As we expected, a sale of the entire business was unachievable, and consequently, assets will be sold off individually with disposal proceeds expected to be below closing costs. As a result, after disposal proceeds, total cash exit costs are expected to be approximately GBP 150 million. Shares fell around 3% after the announcement. We don’t expect to make a material change to our GBX 2,200 fair value estimate. At current levels, the shares look fairly valued.