Why Is Honeywell buying Johnson Matthey’s Catalyst Technologies business?

Honeywell International Inc. confirmed it will acquire the Catalyst Technologies division of Johnson Matthey Plc for £1.8 billion in cash—an aggressive strategic push into sustainable energy solutions. This move builds upon Honeywell’s ongoing transformation from an industrial conglomerate into a technology-driven ESG and energy innovation leader.

This deal, priced at approximately 13.3x FY2025 EBITDA, reflects Honeywell’s confidence in the future demand for low-emission fuels and catalyst-enabled process technologies. The acquisition not only augments Honeywell’s installed base in refining and petrochemical verticals but also provides access to proprietary process technologies crucial to the production of sustainable fuels like SAF (sustainable aviation fuel), blue ammonia, and clean hydrogen.

How Does This Acquisition Expand Honeywell’s Energy and Sustainability Strategy?

Honeywell’s ESS (Energy and Sustainability Solutions) business—part of its broader Industrial Automation strategy—will now integrate Johnson Matthey’s Catalyst Technologies as a complementary layer to its existing UOP process technologies division. Historically, Honeywell UOP has focused on refining, petrochemical production, and gas processing. The addition of Catalyst Technologies gives Honeywell the capability to offer complete value chain solutions: from licensing and engineering services to catalyst provision and lifecycle support.

According to Honeywell CEO Vimal Kapur, the move underscores the company’s evolving value proposition: delivering end-to-end decarbonisation infrastructure at scale. With governments worldwide accelerating net-zero targets and incentivising clean energy adoption, Honeywell is positioning itself to be a preferred technology and solutions provider across new and transitioning fuel markets.

What Is Johnson Matthey’s Rationale for Exiting Catalyst Technologies?

The sale marks the culmination of a broader strategic realignment at Johnson Matthey. Over the past two years, the company has been divesting non-core segments to streamline operations and focus on its most profitable and defensible areas—namely its Clean Air and Platinum Group Metals Services (PGMS) divisions.

CEO Liam Condon said the decision to sell the Catalyst Technologies business followed a detailed evaluation of capital efficiency, future investment returns, and long-term scalability. The £1.8 billion deal delivers a significant valuation premium compared to sell-side analyst estimates and will allow the company to return £1.4 billion of the proceeds to shareholders—translating to nearly £8 per share.

In addition to strengthening shareholder returns, Johnson Matthey expects the divestment to improve operating margins, simplify its capital allocation model, and boost long-term free cash flow generation, which is now targeted at £250 million annually by FY2027/28.

What Makes Catalyst Technologies a Strategic Fit for Honeywell?

Johnson Matthey’s Catalyst Technologies business offers a global portfolio of over 150 licensed technologies and catalyst systems used in refining, petrochemicals, and emerging fuel applications. This includes established technologies for hydrogen production, methanol synthesis, ammonia reforming, and process intensification for circular chemicals.

The division has manufacturing facilities and research hubs in the U.K., U.S., India, and mainland Europe. This international footprint not only complements Honeywell’s global operations but also helps de-risk supply chain exposure in the post-COVID and post-Brexit industrial landscape.

The synergy potential is particularly high in integrated engineering and aftermarket services. With Honeywell already operating an advanced analytics and controls division under Honeywell Process Solutions, the Catalyst Technologies business will plug directly into its digitisation roadmap—offering clients greater efficiency, predictability, and emissions transparency.

How Have Markets Reacted to the Transaction?

Honeywell (NASDAQ: HON)

Honeywell’s share price stood at $222.10 as of May 23, 2025, down slightly by 0.68% on the day of the announcement. Over the past 12 months, the stock has appreciated by approximately 9.4%, reflecting stable investor confidence amid ongoing portfolio reshaping.

Institutional sentiment is largely neutral to positive. Wellington Management, Geode Capital, and Barclays PLC remain top institutional holders, each with over 15 million shares as of Q1 2025. However, there was a minor 1% decrease in institutional ownership in April, suggesting cautious repositioning ahead of regulatory clarity.

Buy-side analysts see the deal as long-term accretive, given the expected EPS uplift and synergy realisation. Still, integration complexity remains a watchpoint. The general recommendation is Hold, with upward bias contingent on execution success and regulatory approvals.

Johnson Matthey (LSE: JMAT)

JM’s stock rose nearly 30% to 1,769 GBX after the deal was made public, indicating overwhelming investor approval. Market optimism was fuelled by the promised £1.4 billion capital return and the sale multiple far exceeding consensus valuations.

Despite modest institutional holdings—hovering around 0.01%—the deal has sparked renewed retail interest. Analysts tracking European industrials say the divestment allows JM to pursue higher-margin strategies with capital discipline and reduced operational complexity.

The consensus rating has shifted to Buy, based on enhanced shareholder yield, strategic clarity, and an attractive PGMS-led growth model.

Where Does This Fit in Honeywell’s Broader Acquisition Timeline?

Since December 2023, Honeywell has pursued an aggressive capital deployment strategy, announcing or completing a series of acquisitions designed to deepen its technological edge and expand its addressable markets. Among the most notable was the acquisition of Civitanavi Systems, a specialist in navigation and inertial systems, which strengthened Honeywell’s position in high-precision motion and aerospace guidance technologies.

The company also took over CAES Systems, a provider of aerospace and defence communications, further enhancing its defence electronics portfolio amid rising global defence budgets. Another strategic transaction involved acquiring the LNG business from Air Products, which significantly broadened Honeywell’s footprint in the energy infrastructure segment and added to its liquefied natural gas processing capabilities.

In addition, the acquisition of Sundyne added critical industrial assets, particularly high-speed pumps and compressors used in petrochemical and industrial markets, reinforcing Honeywell’s capabilities in process engineering and fluid movement solutions. Each of these acquisitions aligns with Honeywell’s long-term objective of transforming into a high-growth, innovation-driven industrial leader focused on automation, sustainability, and energy transition technologies.

Honeywell also announced two major spin-offs: its Aerospace Technologies and Advanced Materials units, each to become publicly traded companies. These moves signal Honeywell’s intention to focus on high-growth, tech-integrated sectors such as automation, sustainability, AI-driven manufacturing, and clean energy systems.

What Should Investors Watch Next?

Investors should monitor regulatory timelines for the Catalyst Technologies acquisition, particularly in jurisdictions where anti-competition reviews could delay closure. Integration announcements, synergy targets, and Q3 or Q4 guidance adjustments from Honeywell will be pivotal in shaping near-term sentiment.

For Johnson Matthey, the key catalyst will be its capital return mechanism announcement and detailed guidance on FY2026 operating model transitions. Updates on cost reduction initiatives, capex cuts, and PGMS margin expansion will likely influence analyst revisions over the next two quarters.