Johnson Matthey accepts 26% price cut on Honeywell deal as catalyst unit underperforms
Feb 23 (Reuters) - Johnson Matthey JMAT.L on Monday agreed to cut the sale price of its catalyst technologies business to Honeywell HON.O by 26% as the unit's profitability weakened, sending its shares down over 17%.
The British chemicals company now expects to sell the unit - which designs and manufactures catalysts used in the production of sustainable aviation fuel, fertilisers and paints - for 1.33 billion pounds ($1.80 billion) from the previously agreed 1.8 billion pounds.
The companies said the revised terms reflect the unit's 2025/26 performance, including deferred sustainable solutions licensing projects and lower catalyst profitability in a tough market.
Johnson Matthey had posted a 60% drop in profit for the unit in November when it reported half-year results.
Shares of Johnson Matthey fell 14.3% to 1,975 pence by 0810 GMT, putting them on track for their steepest one-day drop in more than four years, if losses hold.
'NOT AN OPTIMAL OUTCOME'
The sale of the catalysts business is a key part of Johnson Matthey's business strategy as it streamlines its operations to focus on its core businesses related to emission-reduction products and platinum-group metal processing.
"Whilst the revised consideration is clearly not an optimal outcome, it remains more favourable than weekend reports suggesting Honeywell was considering terminating the deal," Jefferies analysts said in a note.
Bloomberg reported on Saturday that the U.S. industrial conglomerate was considering walking away from the deal completely.
Johnson Matthey expects to return around 1 billion pounds to shareholders upon completion of the deal, down from the 1.6 billion pounds in net proceeds originally anticipated.
The companies also extended the deal deadline to July 21 from February 21, with a possible further extension to August 21 if antitrust approvals remain outstanding.
The deal is now expected to be completed by the end of August.
($1 = 0.7395 pounds)
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