Honeywell International (HON) has revised its deal to buy a key unit from Johnson Matthey Plc (JMPLY), after reports said Honeywell was ready to walk away due to “concerns over regulatory approvals and business milestones.” Now, instead of ending the deal, Honeywell secured a lower price and extended the timeline to close.
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The new agreement values Johnson Matthey’s Catalyst Technologies unit at £1.325 billion, or about $1.8 billion. That is down from the £1.8 billion cash price agreed in May. In short, Honeywell cut nearly £475 million from the original price.
Meanwhile, HON shares rose 1.33% on Friday, closing at $243.97. The stock is already 25% higher year-to-date.
A Lower Price, but the Deal Survives
As mentioned above, earlier reports claimed Honeywell had weighed leaving the deal. However, both sides chose to renegotiate rather than scrap it. The companies also extended the long stop date to July 21, with a possible extension to August 21 if certain terms are met. The deal is now expected to close by the end of August.
The unit makes enzymes used in industrial processes. For Honeywell, the lower price likely improves the return on the deal. At the same time, it avoids the risk and cost of restarting a search for other assets.
In addition, the revised price reflects leverage shifting to the buyer. When a deal faces a delay risk, the buyer often gains room to press for better terms. That appears to be the case here.
Cash Back to Shareholders
Meanwhile, Johnson Matthey plans to return about £1 billion of the net proceeds to shareholders once the sale closes. The company said £800 million will be paid as a special dividend, along with a share consolidation. Another £200 million will be used for an on-market buyback program.
Johnson Matthey also said it is making “good progress” on its new cash-focused strategy and remains on track to deliver 2025 to 2026 results in line with guidance.
Even with the price cut, investors seem comfortable with the outcome. Johnson Matthey’s shares jumped when the deal was first announced in May, and the stock is up almost 60% over the past 12 months.
Overall, the revised agreement keeps both companies moving forward. Honeywell gets the asset at a better price, while Johnson Matthey secures a large cash return for investors and continues its shift toward clean air and platinum group metal chemicals.
Is Honeywell a Good Stock to Buy?
On the Street, Honeywell holds a Moderate Buy consensus view, based on 16 analysts’ ratings. The average HON stock price target is $245.50, implying a 0.63% upside from the current price.
