UK-based Elementis resists key shareholder's call for immediate sale

LONDON (Reuters) -Britain's Elementis on Wednesday rebuffed calls by one of its major shareholders to sell the company, saying an immediate sale of the chemicals group was not ideal given the "substantial value still to be realised".

Franklin Mutual Advisers, which has held a 9.8% stake in Elementis on behalf of clients since December 2020, said in response that it was encouraged by the initial outreach it had received from other shareholders.

The company's "stagnant" share price is "unacceptable" to shareholders and recent "value destructive acquisitions" had undermined confidence in management's ability to drive growth, Franklin said in a letter earlier in the day.

Elementis stock, which has gained just 3.8% this year, was 12.3% higher at 125.4 pence on Wednesday, making it the top percentage gainer on the FTSE 250 index.

"Our board does not believe that Franklin's request to initiate an immediate sale of the company is currently in the best interests of its shareholders," Elementis said in a statement.

The company said it continues to make progress towards its medium-term goal of 17% adjusted operating margin and its target of below 1.5 times net debt and core profit.

However, Franklin said that Elementis "is not of a sufficient size to accomplish its targets", according to a letter signed by portfolio managers Steve Raineri and Chris Meeker.

(Reporting By Sinead Cruise and Radhika Anilkumar and Eva Mathews in Bengaluru, Editing by Iain Withers and Devika Syamnath)