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Investing.com -- Shares in Johnson Matthey PLC (LON:JMAT) rocketed nearly 30% in London trading after the company reached a deal to sell its catalyst business to Honeywell (NASDAQ:HON) for £1.8 billion ($2.42 billion), the companies announced Thursday.
The stock was up 29.7% at £1,802.36 as of 07:58 GMT.
The sale of Catalyst Technologies (CT) is expected to generate about £1.6 billion in net proceeds for Johnson Matthey (LON:JMAT), which plans to shift its strategic focus to its Clean Air business and platinum group metals (PGMS) operations following the divestment.
"Following the sale of CT, JM will be repositioned as a highly streamlined group focused on Clean Air and PGMS, driving sustained strong cash generation to support attractive ongoing returns to shareholders," Johnson Matthey said in an announcement.
"The sale of CT, together with the compelling investment proposition of JM, are expected to deliver substantial value to JM shareholders," it added.
Jefferies analysts said the deal will help "de-lever" Johnson Matthey’s debt, leaving the company with £800 million in net cash and a leverage ratio of 1.6 times.
The analysts said they expected the shareholder returns to be a part of the announcement. "Returning 100% at the current share price implies a buyback/special dividend of c.55% of its market cap. We would expect a strong positive share price response," analysts added.
The announcement came alongside Johnson Matthey’s full-year results. For the year ended March 31, the company reported revenue of £11.67 billion, marking a 9% decline from the previous year.
Operating profit more than doubled to £538 million, up from £249 million, while pretax profit climbed to £486 million from £164 million.
However, the figures fell short of analyst expectations. Consensus estimates compiled by the company had forecast revenue of £12.08 billion, operating profit of £793.4 million, and pretax profit of £733.3 million.
Operating profit in the second half of the year stood at £234 million, 2% ahead of the consensus estimate.
For fiscal year 2026, the company expects mid-single-digit operating profit growth. The guide includes contributions from Catalyst Technologies.
The impact from platinum group metals and foreign exchange is expected to be around -£5 million.
According to Jefferies, this implies an adjusted EBIT of over £400 million, compared to the consensus forecast of £419 million.
Alongside the results, Johnson Matthey’s board proposed a final dividend of 55 pence per share.