LONDON (ShareCast) - Investec has expressed optimism regarding the long-term outlook for newly de-merged company Vesuvius, but has started with a 'hold' recommendation for the shares.

The company, previously known as Cookson, announced on Wednesday morning that the de-merger of its Performance Materials division had become effective and that business will form a new London-listed speciality chemicals company called Alent.

The remaining business, which now consists mainly of its Engineered Ceramics division, has been renamed Vesuvius. Shares were down around 50% on Wednesday morning to reflect the de-merger.

"Today’s de-merger of the former Cookson Group presents an opportunity to leave behind an unfortunate legacy. The group was a serial equity fund-raiser – to finance acquisitions or survival – and it had a record of value destruction.

"In spite of the undoubted cyclicality of its markets, we believe that Vesuvius can break with the past and be managed prudently to generate robust cash flows, underpinning a good and progressive dividend."

The broker said that the shares are now trading close to its 346p target price.

BC

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