Bloomberg News

Cookson Rises on Study of Splitting Main Divisions: London Mover

May 17, 2012

Cookson Group Plc (CKSN) rose as the world’s biggest maker of ceramic linings for metal smelters said it is considering a split of the company’s two main divisions.

Cookson jumped 5.5 percent, the third-largest advance in the FTSE350 Index. (NMX) That extended this year’s gain to 33 percent and valuing the company at 1.9 billion pounds ($3 billion).

The manufacturer, based in London, is considering a demerger given the limited operational overlap between the Engineered Ceramics and Performance Materials division, it said today in a statement.

“Cookson has considerable value and a review to unlock it is clearly a positive,” Harry Philips, a London-based analyst at Oriel Securities, wrote today in a research report. He reiterated a buy recommendation and said the potential breakup could take the stock “higher still” from his 900-pence prediction.

The manufacturer completed the sale of its precious metals processing division’s U.S. operations to a Berkshire Hathaway Inc. subsidiary on May 1. It acquired Metallurgica Beteiligungsesellschaft assets in Germany and the U.S. in March.

Unlocking Value

“There remains considerable scope to further enhance performance of the individual businesses and unlock further shareholder value,” Cookson said today.

The stock reached a 3 1/2-year high on April 19 after the Sunday Times said the company may spin off the materials division, which makes electronic assembly materials for equipment manufacturers.

The company said today it has completed an initial analysis of a separation of divisions, and that one-time costs would amount to 50 million pounds to 70 million pounds. Christer Gardell, co-founder of Cevian Capital, the Swedish investment company that owns 20 percent of Cookson’s shares, will join the manufacturer’s board.

Five of seven analysts among those who share their recommendations with Bloomberg and reiterated their stances today advised investors to buy the shares. Oliver Wynne-James of Panmure Gordon, whose ratings have generated the best return among 17 analysts who’ve shared their views, reiterated a hold recommendation and raised his 12-month price target to 790 pence from 760 pence.

Cookson said today that shareholders approved its senior executive pay and share disbursement proposals, though 32 percent of votes were cast against the plan. The board “continues to listen very carefully” and will take views expressed by shareholders and the results of the vote into account in setting future remuneration policy.

Cookson also said today that trading in the first four months of the year met its expectations and reiterated a forecast for the full year. The company predicts “mid-single digit growth globally in the group’s main end-markets in 2012, with generally weaker demand in Europe offset by continued growth in the Americans and Asia-Pacific.”

To contact the reporter on this story: Cormac Mullen in Dublin at cmullen9@bloomberg.net

To contact the editor responsible for this story: James Ludden at jludden@bloomberg.net; David Risser in London at drisser@bloomberg.net


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