Nearly a third of shareholders voted against boardroom pay at Cookson’s AGM, but it may be the last chance they get to vent their fury at the current team. The industrial material firm’s electronics and ceramics divisions have never sat well together and a strategic review, now underway, suggests an imminent parting.
Some quick number crunching puts the upfront cash cost of separation at between £50m and £70m, and ongoing, incremental costs at about the same level. Not cheap, but splitting the business should trigger a re-rating, eliminating the conglomerate tag and big discount to peers that comes with it. Appointing Christer Gardell, co-founder of activist investor Cevian Capital, to the board suggests this is serious. The hedge fund owns over 20 per cent of Cookson and will “keep the management on their toes,” reckons one analyst.
And it will need to, given crisis-torn Europe accounts for over a third of group revenue. That said, February’s annual results were good and trading profit is up slightly since the turn of the year. Demand for higher margin products used in tablet devices and smartphones is strong in Asia and the Americas. Ceramics are selling well, too, although the smaller fused silica business is still losing money.
