CMC is a manufacturer of decorative and specialised materials for the ceramic industry which was formed as a 50:50 joint venture between Johnson Matthey and Cookson on 1st July 1994. In the preliminary audited results for the year ended 31st December 1997, CMC made an operating profit of £20.1 million. After exceptional items (£2.6 million) and interest on external bank debt (£5.0 million), the profit was £12.5 million. After interest paid on shareholder loans, there was a loss before tax of £6.7 million. Net assets at 31st December 1997, before deducting parental loans, were £129 million. (Shareholders' funds at the same date were minus £131 million.)

The consideration of £65 million will be paid in cash upon completion, which is subject to certain regulatory clearances. In addition, JM will assume responsibility for CMC's bank borrowings (all short term) which total £67 million net.

The consideration relates to the purchase of all of the outstanding loan stock and equity in CMC.

CMC will become the Ceramic Materials Division of Johnson Matthey, under the management of Chris Clark, JM's Chief Operating Officer.

Johnson Matthey has acquired full ownership of CMC for the following reasons:

- The acquisition is expected to be strongly earnings enhancing in our next financial year.

- Single ownership will result in a slimmer and more responsive management structure. Annual cost savings in administration and other areas will exceed £4 million.

- The sale of certain peripheral businesses, as announced in November 1997, is well advanced. This will generate cash to reduce borrowings.

- Major investment programmes are complete and the core business will be cash generative going forward. - Key European markets, where CMC has 65% of its sales, are showing signs of recovery.