Johnson Matthey PLC shares plunged almost 15% after it agreed to cut the price it is selling its Catalyst Technologies (CT) division to Honeywell and the amount it will pay out to shareholders.
The FTSE 250-listed chemicals group said it has lowered the price to reflect CT's recent business performance, which includes the deferral of key licensing projects and reduced profitability from supplying catalysts because of what it described as a challenging market environment.
As a result, the agreed enterprise value of the business has been set at £1.325 billion on a cash and debt-free basis, down from £1.8 billion when the sale was agreed last May.
JMAT and Honeywell have also pushed back the long stop date for the transaction from February to 21 July. If the only outstanding condition at that point is antitrust approval, the deadline can be extended again to 21 August. The companies expect to complete the sale by the end of August.
Following completion, Johnson Matthey now expects to return about £1 billion of net proceeds to shareholders, down from the promised £1.4 billion before.
The new amount will comprise £200 million via a share buyback and £800 million through a special dividend combined with a share consolidation, with the latter to reduce the number of shares in issue to offset the impact of the special dividend on the share price.
The group said it continues to make good progress on its new cash-focused business model and remains on track to deliver performance in the 2026 financial year in line with guidance.
That includes underlying operating profit growth at the higher end of a mid single digit percentage range and positive free cash flow materially higher than last year.
JMAT shares fell 14.7% to 1,965.62p, the lowest since December.
Analysts at broker Panmure Liberum said it was "not good news" but reflects the weak trading environment at CT, where EBIT wad down 60% to £20 million in the first half of the current financial year.
"However, we believe that completing the transaction is still the right course of action as it will allow JM to focus on delivering a leaner more focused, highly cash generative business."
** UPDATE: Adds share details, broker comment **