NEWS
Elementis reorganises under pressure
UK-based speciality chemicals company Elementis has announced that , by mutual agreement , CEO Paul Waterman will step down no later than the AGM in April . It has also named Christopher Mills , CEO of Harwood Capital , as a non-executive director with effect from 1 January . Harwood and its affiliates own 2.5 million shares in the company .
This comes in response to pressure over the last 12 months from ‘ activist ’ shareholders , who had called for Waterman to leave . In November 2023 , Franklin Mutual Advisers published an open letter to board chairman John O ’ Higgins , calling for Elementis to put itself up for sale . It accused the company of “ a shocking amount of shareholder value destruction ”, mainly as a result of recent acquisitions .
This pressure increased in April 2024 , when Gatemore Capital Management published a similar letter , stating that there was a huge gulf between the firm ’ s fundamental strengths and its “ persistently weak share price ”. Under Waterman , Gatemore said , Elementis had total shareholder returns 86 % lower than its peers and 76 % lower than the FTSE 250 , despite three takeover approaches boosting the share price .
Elementis responded that : “ The board continues to believe that shareholder value is best driven by a focus on delivering the substantial actions that are currently being progressed at pace throughout the business .” In July , Gatemore published a second letter , describing this as “ wholly inadequate ”. It called for the cost-savings programme to be accelerated , Waterman replaced and a strategic review , including a potential disposal of the Talc business .
Gatemore also noted that Waterman had sold 350,000 shares in the company , which it called “ tone-deaf in the context of extensive cost cuts ” and sent “ an extremely poor signal to shareholders on the CEO ’ s views on the future prospects of the business ”. Over the course of 18 years at Elementis including eight as CEO , Gatemore noted , Waterman had earned £ 14 million .
Gatemore welcomed Waterman ' s departure saying it “ marks the implementation of the third step we called for ”. The others were already announced in August , though the outcome with regard to the Talc business remains to be seen . " Additionally , we remain actively engaged with fellow shareholders to ensure the optimal composition of the board and to determine who is best suited to lead the process of selecting a new CEO to drive the company forward ," said managing partner Liad Meidar .
In announcing Mills ’ appointment the Elementis board said that it “ shares the frustration of many shareholders with the company ' s valuation , which it believes has not reflected the quality of the business and its assets for some time ”. Mills will support the board on existing and new initiatives to narrow this gap .
Elementis mainly supplies the personal care sector , notably cosmetic and antiperspirant actives ; it is the world market leader in the latter field . 85 % of its products are of natural origin . Coatings and paper are other key markets .
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