Johnson Matthey PLC (LSE:JMAT), the FTSE 100 specialty chemicals group, is acquiring Cormetech, the leading US manufacturer of selective catalytic reduction (SCR) catalysts, for an enterprise value of $360 million in cash.
An additional earn-out of up to $100 million may be payable in 2028 and 2029 if Cormetech hits certain financial targets.
The deal materially scales up JM's Clean Air Solutions business, creating a combined operation with sales exceeding £200 million and an operating margin of at least mid-teens in the 2026/27 financial year.
Cormetech makes catalysts that remove nitrogen oxide pollutants from natural gas turbines and coal-fired power plants, serving more than 400 customers across over 2,500 SCR systems worldwide.
The strategic logic centres on the rapid expansion of US data centre construction, which is driving structural demand for gas-fired power generation and, in turn, for the emissions control catalysts Cormetech produces.
The acquisition multiple is 10.3 times Cormetech's expected 2026 earnings (EBITDA) of roughly $35 million, falling to around 6.5 times once $20 million of annualised run-rate synergies are factored in.
Those synergies, to be fully realised by 2030, are split approximately 70% revenue benefits from cross-selling and 30% cost savings.
JM said the deal will be earnings per share accretive from the first full year of ownership on a pre-synergy basis, with return on invested capital expected to exceed the group's cost of capital within three years.
Cormetech's secured orderbook of roughly $300 million underpins sales through 2027, while a pipeline of approximately $1 billion in projects, primarily linked to US data centres, supports the medium-term outlook.
The acquisition will be funded from existing debt facilities, with pro forma leverage expected to sit at around 1.8 times net debt to EBITDA after accounting for both this deal and the pending sale of JM's Catalyst Technologies business to Honeywell.
JM reiterated its guidance on returning £1 billion in net proceeds from the Honeywell transaction to shareholders, with completion of that sale expected by the end of August.
The Cormetech deal is expected to close at the end of June or in July.