Shares in chemicals firm Johnson Matthey (JMAT) slid 14% to £19.70 after Honeywell (HON) cut its offer for JM’s catalyst unit. The two companies also extended the ‘long stop’ date to get the deal done from 21 February to 21 July.
| Share price: £19.70 (-14%) | PE: n/a |
| Maket cap: £3.28bn | Yield: 4% |
Lower capital returns
Honeywell had originally agreed on a £1.8 billion price tag for JM’s Catalyst Technologies business. However, the US firm amended its offer to £1.325 billion based on the division’s weak performance last year.
The catalyst business suffered the deferral of key licensing projects and reduced profitability due to a ‘challenging’ market. JM will now return £1 billion to shareholders via an £800 million special dividend and a £200 million buyback.
The UK firm originally expected the £1.8 billion sale to complete in H1 2026. It had also planned to hand shareholders £1.4 billion in special dividends and buybacks.
JM insisted its new cash-focused business model was making ‘good progress’ and its FY26 results would meet expectations. That includes group underlying operating profit at the higher end of guidance and ‘materially higher’ positive free cash flow.
Meanwhile, Honeywell said adding the Catalyst unit would allow it to expand in refining, petrochemical and renewable fuel markets. It also said at the new, lower price the deal would create synergies and be EPS-enhancing in year one.
JM has never been high on our list of stocks despite the market tilt towards cyclicals over the last year. With the shares having doubled, we were bound to see sellers on today’s disappointing news.
Unfortunately, beggars can’t be choosers, and with no-one else stepping up for the Catalyst business JM has to suck it up. Investors will have to hope the new leaner, more focused group delivers on its promise to generate more cash.
Read the press release here: https://matthey.com/investors
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