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Johnson Matthey accepts a 26% price reduction on Honeywell deal due to underperformance of catalyst unit

Johnson 'Matthey agreed on Monday to?cut? the sale price of its business catalyst technologies to Honeywell by 26 percent as its profitability declined. This sent its shares down more than 17%.

The British chemical company expects to now sell the unit, which designs and produces catalysts for sustainable aviation fuels, fertilisers, and paints at 1.33 billion pounds ($1.80billion) instead of the previously agreed upon 1.8 billion pounds.

The companies said that the revised terms reflect 2025/26 unit performance, which includes deferred sustainable solution licensing projects and lower catalyst profitability on a difficult market.

Johnson Matthey reported a 60% decline in profits for its unit when it announced half-year results in November.

Johnson Matthey shares fell 14.3% to 1,975 pence at 0810 GMT, and if the losses continue, they will have experienced their steepest drop in a single day for more than four year.

"NOT A OPTIMAL RESULT"

Johnson Matthey is selling its catalysts business as part of its business strategy to streamline its operations and focus on its core business related to platinum-group metals processing and emission-reduction products.

The analysts at Jefferies said that "while the revised consideration was not the optimal outcome, it is still better than the weekend reports that?Honeywell considered terminating the agreement"

Bloomberg reported on Saturday that the U.S. conglomerate may be considering walking away completely from the deal.

Johnson Matthey anticipates returning around 1?billion pound to shareholders after the completion of the deal. This is down from the 1.6 billion pound in net proceeds that was originally expected.

The companies extended the deadline for a deal to July 21 from February 21. A possible further extension could be made to August 21, if there are still unresolved antitrust issues.

The transaction is expected to close by the end August.

(source: Reuters)