UK-based technology company Johnson Matthey has entered a definitive agreement for the sale of its medical device components (MDC) division to private equity company Montagu in a £550m ($700m) cash deal.

This transaction, to be executed on a cash-free debt-free basis, is part of a strategic divestment programme initiated in May 2022.

The MDC division specialises in creating components for medical device manufacturers using precious metal alloys and nitinol. The focus is on the development and manufacturing of miniature components required for minimally invasive medical devices that are used in high-growth clinical specialities.

With manufacturing facilities in the US, Mexico and Australia, the business has established a significant global presence in the medical device sector.

The proposed divestiture of MDC marks the completion of Johnson Matthey’s programme to sell its Value Businesses, exceeding the initial financial target of £300m. 

Johnson Matthey’s board intends to allocate £250m, ­­­a substantial portion of the proceeds, to its shareholders.

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The remaining funds from the sale will be directed towards reducing the company’s existing debt and for other general corporate purposes.

Subject to necessary approvals and closing conditions, the transaction is anticipated to conclude in the third quarter of this year.

MDC will run as a new standalone company, following the close of the transaction.

Johnson Matthey chief executive Liam Condon said: “The announcement represents a significant milestone in our disposals programme announced in May 2022. As a JM business, MDC has delivered technological differentiation and good growth to the critical health sector. We welcome Montagu’s plans to continue the investment and growth plans at MDC. 

“We are pleased that this concludes our Value Businesses disposal programme which will deliver benefits to JM shareholders in terms of value realisation, simplification and increased focus on our growth businesses, where JM has a proven ability to win.”