Honeywell Seals £1.8bn Deal to Acquire Johnson Matthey’s Catalyst Technologies Arm
In a significant development, US industrials group Honeywell has agreed to purchase the catalyst technologies arm of FTSE 250 chemicals company Johnson Matthey for £1.8bn. According to people familiar with the matter, the unit will be integrated into Honeywell’s automation division.
The catalyst technologies business, which develops catalysts that enhance the efficiency of chemical manufacturing processes, generated approximately £728mn in revenues in the year to March 31. This figure is higher than analyst forecasts of around £613mn. As part of the deal, Johnson Matthey will return £1.4bn to shareholders.
The sale is part of Johnson Matthey’s efforts to "fundamentally reshape the company into a more focused and leaner business," according to Chief Executive Liam Condon. The company has been under pressure from activist investor Standard Investments, which called for a strategic review of the business last December.
This deal marks the latest in a series of acquisitions in which US groups have acquired UK assets. Earlier this year, US-based American Axle & Manufacturing agreed to purchase UK automotive parts manufacturer Dowlais Group for £1.2bn, while DoorDash acquired UK food delivery service Deliveroo for £2.9bn.
A New Era for Johnson Matthey
Johnson Matthey’s catalyst technologies unit is expected to be combined with Honeywell’s UOP brand, which specializes in developing technologies including catalysts for use in petroleum refining and gas processing. The deal is set to close next year, subject to regulatory approvals.
The acquisition is a significant step in Honeywell’s efforts to focus on automation, as announced by Chief Executive Vimal Kapur earlier this year. The company plans to break up into three separate units, including spinning off its Solstice Advanced Materials unit as a separate listed company.
As reported by the Financial Times, Honeywell has been on an $11bn acquisition spree since December 2023, including the $2.1bn buyout of pump manufacturer Sundyne and the $1.9bn takeover of defence electronics group CAES Systems Holdings.
A Changing Landscape for UK Businesses
The sale of Johnson Matthey’s catalyst technologies arm highlights the ongoing trend of US companies acquiring UK assets. As noted by the Financial Times, London’s mid-cap FTSE 250 has proven to be a fertile hunting ground for US acquirers.
Shares in Johnson Matthey, which had a market capitalization of £2.3bn before the deal was announced, have fallen nearly 24 per cent in the past year. The company has faced challenges, including unsuccessful acquisitions, bumpy earnings, and margin pressures in some of its businesses.
In response to the deal, Liam Condon stated that the sale will enable Johnson Matthey to focus on its core businesses and create a more streamlined organization.
The deal is subject to regulatory approvals and is expected to close next year. As reported by the Financial Times, Honeywell did not immediately respond to requests for comment on the deal.
What’s Next for Honeywell and Johnson Matthey?
The acquisition of Johnson Matthey’s catalyst technologies arm marks a significant step in Honeywell’s efforts to focus on automation. The company plans to spin off its Solstice Advanced Materials unit and break up its automation and aerospace technologies businesses into two separate businesses.
For Johnson Matthey, the sale marks a significant change in its business strategy. The company will return £1.4bn to shareholders and focus on its core businesses.
As the deal is set to close next year, both companies will need to navigate the changing landscape of the global market. According to the Financial Times, the acquisition is a significant development in the ongoing trend of US companies acquiring UK assets.
In conclusion, the £1.8bn deal between Honeywell and Johnson Matthey marks a significant change in the business landscape of both companies. As reported by the Financial Times, the acquisition is a major step in Honeywell’s efforts to focus on automation, while Johnson Matthey will focus on its core businesses.
