Johnson Matthey shares rocket after $2.4bn sale of catalyst division to Honeywell
The share price soared to 1,743p on the news of that deal and a good set of results. The catalyst division sale leaves JM to focus on clean air and PGMS, driving sustained strong cash generation to support attractive ongoing returns to shareholders.
The sale of CT, together with the compelling investment proposition of JM, are expected to deliver substantial value to shareholders, the company maintained. The Honeywell deal is expected to deliver net sale proceeds of c.£1.6bn to the Group, subject to customary closing adjustments. It also spells a significant cash return to shareholders - £1.4bn once the deal is completed.
Chief Executive Liam Condon said: "The announcement represents a significant milestone in the history of Johnson Matthey. Following on from the divestment of our Medical Devices business at a highly attractive valuation, we have now agreed to the sale of our Catalyst Technologies business for £1.8bn.
"This allows JM to realise a very attractive valuation for this business that fully reflects its strong long-term growth prospects. We will now fundamentally re-shape Johnson Matthey into a more focused and leaner business.
"This will better position us to leverage our strong capabilities and leading market positions in Clean Air and PGM Services to drive a step change in sustainable cash generation with higher returns to shareholders. JM is a great company and we are confident that the actions we have announced will deliver substantial and sustainable value to our shareholders."
Preliminary results for the year ended March 31 were in line with expectations against what Condon described as a challenging macro-market backdrop. JM reported an operating profit of £538m after the £482m profit on division disposals. This was partly offset by £329m impairment and restructuring charges primarily across Clean Air, PGM Services and Hydrogen Technologies.
Condon said: "The announcement represents a significant milestone in the over-200 year history of Johnson Matthey. Following on from the divestment of our Medical Devices business at a highly attractive valuation, we then agreed to the sale of our Catalyst Technologies business for £1.8 billion.
"This allows JM to realise a very attractive valuation for this business that fully reflects its strong long-term growth prospects. We will now fundamentally re-shape Johnson Matthey into a more highly focused and leaner business.
"This will better position us to leverage our strong capabilities and leading market positions in Clean Air and PGM Services as we drive a step change in sustainable cash generation with higher returns to shareholders.
"Our full year results were underpinned by a strong second half and were in line with guidance and market expectations, against challenging market headwinds. This resilient performance reflects the strength of our businesses and the strategic progress delivered, including cumulative benefits of £200 million from our 2021/22 to 2024/25 group transformation programme."
