Johnson Matthey Reduces Sale Price of Catalyst Technologies to Honeywell

Johnson Matthey has announced a significant reduction in the sale price of its Catalyst Technologies division to Honeywell. The UK chemicals group has amended the financial terms, dropping the deal’s value by £500 million to £1.325 billion. This decision comes in response to regulatory delays in China and falling performance metrics for Catalyst Technologies.

The decision to lower the price reflects a recent decline in both sales and profits for the division. Catalyst Technologies, known for developing catalysts that facilitate the production of hydrogen and sustainable aviation fuel, reported a 17 per cent drop in sales, down to £272 million, alongside a staggering 60 per cent decrease in profits, now at £20 million. The company previously faced pressure from its largest shareholder, Standard Investments, to pivot away from investments in less certain technologies.

Discussions had become strained as the original deadline for Chinese regulatory approval passed without resolution. Honeywell threatened to abandon the acquisition altogether. Johnson Matthey’s subsequent warnings of potential litigation prompted a quick resolution. After intensive negotiations over 48 hours, both parties agreed to the revised price, emphasising the need for a timely conclusion to the deal.

Unfortunately for Johnson Matthey’s investors, the revised terms mean that they will not receive the £1.4 billion in distributions initially promised. Instead, a special dividend of £800 million will be issued, alongside a commitment for a £200 million share buyback. Market responses have been negative, as shares in Johnson Matthey fell by over 16 per cent, with analysts noting that while this outcome is less than ideal, it may ultimately serve the company better than prolonged litigation.

The backdrop of this negotiation also reflects broader challenges in the sector. US investment in green technologies has waned significantly since policy changes under the Trump administration, which rescinded key incentives. Current dynamics suggest a cautious outlook for firms investing in future technologies.