Elementis: Activist investor calls for chemical firm’s chief to go amid ‘weak’ share price concerns
An activist investor in FTSE 250 firm Elementis has called for the removal of its chief executive as it becomes the latest shareholder to bemoan the chemicals group’s “persistently weak” share price.
Gatemore Capital Management, which holds a 0.6 per cent stake in Elementis, said in a letter to chair John O’Higgins that it had seen “years of disappointing performance” since CEO Paul Waterman took the reins in 2016.
The investor called on Elementis’ management to accelerate and confirm details around its $30m cost-cutting program scheduled for 2024 and 2025, replace Waterman and conduct a strategic review of the company’s portfolio to make it more attractive for a strategic buyer.
Gatemore said recently-appointed non-executive director Heejae Chae should lead the search for Waterman’s replacement.
It added: “We believe that many of Elementis’ current problems are self-inflicted and demonstrate a continued failure of judgement of the company’s top leadership team, most notably the CEO.
“Since the current CEO Paul Waterman came into the office in 2016, Elementis has delivered subpar total shareholder returns as compared to its peers, despite the share price having been supported by three takeover approaches throughout the period.”
Gatemore’s scathing letter comes after fellow investor Franklin Mutual, an American fund manager with a roughly 9.8 per cent stake, criticised the board’s decision to reject a US private equity takeover offer valuing Elementis at £840m in January.
Since 2020, the firm has received and rejected three takeover offers.
In response to Gatemore’s letter, Elementis said in a stock market filing that the board still believed the best way to drive shareholder value would be through “a focus on delivering the substantial actions that are currently being progressed at pace throughout the business and that underpin progress towards the 2026 targets”.
Elementis’ shares were trading up 2.2 per cent on Monday morning. The firm is due to issue a trading update on Tuesday before its annual general meeting later that morning.
Russ Mould, investment director at AJ Bell, said: “Naming and shaming in this way are classic techniques by investors who are fed up with a company. Typically, this tends to be a measure of last resort and it will be interesting to see if other investors rally together and put on more pressure to enforce change in the business.”
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