REG - Johnson Matthey PLC - Johnson Matthey acquisition of Cormetech

Johnson MattheyAnnouncement

Today 07:02

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20260528:nRSb9568Fa&default-theme=true

RNS Number : 9568F  Johnson Matthey PLC  28 May 2026

28(th) May 2026

 

Johnson Matthey Plc

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

 JM to acquire Cormetech, materially enhancing scale in Clean Air Solutions

 Johnson Matthey Plc ("JM" or the "Group") is pleased to announce that it has
 reached an agreement to acquire CORMETECH Inc. ("Cormetech"), the leading and
 high-growth US manufacturer of Selective Catalytic Reduction ("SCR") catalysts
 providing emissions control for stationary power generation and industrial
 applications (the "Transaction").

 Under the terms of the Transaction, JM will acquire Cormetech for an
 enterprise value of $360 million payable in cash on completion, which
 represents a 10.3x acquisition multiple based on Cormetech's expected 2026
 EBITDA¹. An additional earn-out consideration of up to a total of $100
 million may be payable in cash during calendar years 2028 and 2029,
 conditional on Cormetech achieving certain financial performance targets.

 Key highlights

 ·         Acquisition of the leading SCR catalyst manufacturer with a significant market
           presence in a structurally growing US power generation market, with demand
           underpinned by the rapid construction of data centres

 ·         Compelling strategic rationale: materially enhances the scale of JM's Clean
           Air Solutions business, with the enlarged portfolio comprising:
           o                                         Highly complementary emissions control products in power generation
                                                     applications
           o                                         Strong global category leadership in a total addressable catalyst market of
                                                     over $1 billion that is expected to deliver double digit growth over the
                                                     medium term
           o                                         Leading and differentiated portfolio of technology and IP, enabling the
                                                     combined group to provide customised best-in-class catalysts and systems
                                                     across a range of future energy platforms to a highly diverse customer base

 ·         Highly attractive financial outcomes: supports sustainable value creation for
           JM shareholders
           o                                         Cormetech is expected to deliver strong growth in sales and profit over the
                                                     near, medium and long term that will be accretive to JM, underpinned by a
                                                     large, secured c.$300 million orderbook² and substantial c.$1 billion project
                                                     pipeline
           o                                         Meaningful annualised run-rate synergies of at least $20 million at the EBITDA
                                                     level, to be fully realised by 2030. This is equivalent to c.60% of
                                                     Cormetech's expected 2026 EBITDA and comprises approximately 70% revenue and
                                                     30% cost synergies
           o                                         EPS accretive to JM from the first full year of ownership on a pre synergy
                                                     basis
           o                                         Return on invested capital to exceed JM's cost of capital within three years
                                                     following completion
           o                                         JM to operate at approximately 1.8 times pro forma leverage following the
                                                     acquisition of Cormetech, sale of JM's Catalyst Technologies business and
                                                     return of £1 billion net sale proceeds to JM shareholders, with strong Group
                                                     cash generation supporting de-leveraging to within JM's 1.0 to 1.5 times
                                                     target leverage range by 31(st) March 2029

 ·         Transaction expected to complete at the end of June or in July 2026 following
           receipt of customary regulatory approvals

 ·         JM remains on track to deliver existing financial guidance on Group cash
           generation and shareholder returns, including returning £1 billion of net
           sale proceeds to shareholders following the sale of JM's Catalyst Technologies
           business to Honeywell International Inc. (completion expected by the end of
           August 2026)

 Liam Condon, Chief Executive Officer, Johnson Matthey, said:
 The acquisition of Cormetech is the next step in delivering our strategy of
 focusing on Johnson Matthey's strengths. This is a business we have long
 admired, given its leading position and longstanding and diverse customer
 relationships in emissions control for the rapidly growing US power generation
 market. Through this highly complementary acquisition, we will be able to
 materially enhance the scale of our Clean Air Solutions business whilst
 delivering attractive financial outcomes to support sustainable value creation
 for our shareholders.

 Together with the expected sale of our Catalyst Technologies business, this
 transaction represents another important milestone in our strategy to further
 strengthen JM, driving long-term value creation and cash generation.

 Overview of Cormetech
 Cormetech was founded in 1989 and is the global leader in the design,
 production and full life-cycle management of SCR catalysts for natural gas
 turbines and coal-fired power plants. SCR catalysts provide a highly effective
 solution to clean the air of nitrogen oxides pollutants emitted by industrial,
 refining, petrochemical and power generation companies.

 Cormetech has a significant presence in the US SCR market and provides
 solutions to over 400 customers, of which 90% have used Cormetech's products
 for over a decade. As a result, Cormetech has established the largest global
 installed SCR catalyst base operating in over 2,500 SCR systems, which total
 over 300GW of generation capacity worldwide. The installed base supports
 highly recurring replacement cycle driven sales, which are protected by
 Cormetech's IP. The company currently operates two manufacturing sites in the
 US and has c.350 employees, delivering 2025 sales of $129 million (+15%
 annualised CAGR since 2020) and EBITDA of $16 million (+65% annualised CAGR
 since 2020). Cormetech expects to deliver c.$180 million of sales and c.$35
 million of EBITDA for 2026³.

 Overview of JM's Clean Air Solutions business
 Johnson Matthey's Clean Air Solutions business serves the stationary emissions
 market in the marine, industrial and utilities segments through SCR and
 oxidation catalysts, system and service offerings for diesel and gas-based
 power generation.

 The business capitalises on JM's 50+ year history in automotive emissions
 control, focusing on the mitigation of criteria pollutants (nitrogen oxides
 and carbon monoxide and particulates) and greenhouse gases (methane and carbon
 dioxide). The business benefits from a strong base of repeat customers with
 over 70% of sales from returning customers. Clean Air Solutions' scalable
 system designs are capable of serving stationary engines ranging in size from
 50kW to 5MW. Clean Air Solutions operates manufacturing sites in Germany and
 Mexico and delivers the majority of sales to North American customers,
 generating total sales of £67 million and underlying operating profit of £10
 million during 2025/26.

 The combination of Clean Air Solutions and Cormetech will result in a
 fast-growing business with sales in excess of £200 million and an operating
 margin of at least mid-teens in 2026/27.

 Compelling strategic rationale and highly attractive financial outcomes

 Structural growth in a large addressable market
 The Transaction will strengthen JM's position in the US power generation
 market, which is benefiting from the rapid expansion in data centre
 construction. This increasing demand for data centres, together with tighter
 US nitrogen oxides emissions regulations and greater usage of distributed
 generation systems to increase energy reliability, is expected to underpin
 long-term structural demand for higher value SCR catalysts to generate cleaner
 electricity.

 Together with similar structural growth characteristics across the global
 oxidation catalyst market served by JM today, the combined Clean Air Solutions
 and Cormetech business will operate with global leadership in a highly
 attractive, large and growing addressable market. The global SCR and oxidation
 catalyst market was worth $1.1 billion in 2025 and is forecast to grow at a
 c.11% CAGR to 2030⁴.

 Global leadership with highly complementary portfolios and technologies
 Within this large and growing addressable market, the Transaction will create
 a leading global provider of stationary emissions catalysts, combining two
 businesses with highly complementary products, technologies, geographies and
 customers. Cormetech represents a compelling investment opportunity that is
 aligned to JM's strategic objectives, and immediately and materially enhances
 the scale of JM's existing Clean Air Solutions business.

 The Transaction will also deliver a leading and differentiated portfolio of
 honeycomb technology and IP from Cormetech. In particular, Cormetech's IP in
 gas turbines and module designs will enable JM to offer customised
 best-in-class catalysts and systems for a range of energy platforms. This
 capability will become increasingly important as distributed generation
 requires a range of customised approaches depending on the fuel selection and
 mode of power generation. Cormetech is also in the process of developing
 advanced carbon capture technology that is expected to be commercialised over
 the medium term, thereby further strengthening JM's technical capabilities.

 In that context, the combined Clean Air Solutions business broadens JM's
 ability to serve customers across the most significant power generation
 sources, both today and through the energy transition. Its combined
 capabilities include control solutions for harmful emissions from natural gas
 turbines, diesel and natural gas engines, and coal-fired power plants. Over
 time, the business will be strongly positioned to support emerging
 technologies, including mixed-fuel turbines using hydrogen, ammonia and
 natural gas, as well as fuel-agnostic engines and fuel cells capable of
 operating on methanol, ammonia, hydrogen, propane, diesel and gas.

 Highly attractive financial outcomes
 The Transaction is expected to deliver highly attractive financial outcomes
 and sustainable value creation to JM shareholders, due to a combination of the
 strong underlying financial profile of Cormetech and the substantial synergies
 that are expected to be realised from the acquisition.

 On a standalone basis, Cormetech has delivered a strong financial track record
 of profitable growth that is expected to continue as the business benefits
 from the structural growth drivers and its leadership position in its core US
 SCR market. This is expected to drive strong growth in pre-synergy sales and
 profit over the near, medium and long term, which will be accretive to JM. In
 particular, JM's confidence in the delivery of this financial performance is
 underpinned by Cormetech's secured c.$300 million orderbook² from its
 longstanding customer base that supports sales in 2026 and 2027, in addition
 to its substantial c.$1 billion project pipeline over the medium-term that
 primarily comprises US-based projects relating to data centres. Cormetech's
 leading market position and strong financial characteristics are expected to
 enable the business to self-fund its modest organic growth capex requirements
 over this period.

 JM also expects to realise meaningful combination synergies. The run-rate
 synergy quantum is expected to be at least $20 million at the EBITDA level, to
 be fully realised by 2030. This is equivalent to c.60% of Cormetech's expected
 2026 EBITDA. Approximately 70% of the run-rate synergies comprise revenue
 benefits through cross-selling Cormetech and JM Clean Air Solutions products
 to the existing customer base, and leveraging the strong combined commercial
 offering to attract new customers. The remainder of the synergies comprise
 cost savings that primarily include lower procurement spend and other
 operating efficiencies. JM expects to incur approximately $6 million of total
 one-off costs during 2026 and 2027 to deliver the run-rate synergies.

 In aggregate, the Transaction is expected to deliver earnings per share
 accretion to JM on a pre synergy basis from the first full year following
 completion. Return on invested capital is expected to exceed the Group's cost
 of capital within three years following completion of the Transaction,
 demonstrating the Group's focus on capital discipline and value creation.

 JM has prepared a detailed plan to integrate Cormetech with its Clean Air
 Solutions business. This includes operating the enlarged business
 independently of the rest of Clean Air following completion of the
 Transaction, in order to drive continued strong performance and realise
 synergies.

 Financial information and guidance
 The Transaction will be funded from JM's existing debt facilities. Following
 the acquisition of Cormetech, JM reiterates its guidance on Group cash
 generation and shareholder returns. This includes:

 ·         The return of £1 billion of net proceeds to JM shareholders following the
           expected completion of the sale of JM's Catalyst Technologies business to
           Honeywell International Inc. (completion expected by the end of August 2026)
 ·         Annualised sustainable free cash flow generation of at least £250 million by
           2027/28, supporting shareholder returns of at least £200 million per annum in
           respect of 2026/27 and beyond (split between ordinary dividends and share
           buybacks)

 Following completion of the acquisition of Cormetech, the sale of JM's
 Catalyst Technologies business and the return of £1 billion net sale proceeds
 to shareholders, JM expects to operate at pro forma leverage of approximately
 1.8 times net debt to EBITDA as at 31(st) March 2027. The strong expected cash
 generation of the Group, consistent with current guidance, is expected to
 support balance sheet de-leveraging to within JM's target leverage range of
 1.0 to 1.5 times net debt to EBITDA by 31(st) March 2029.

 Next steps
 The Transaction is subject to customary conditions, including the receipt of
 certain customary regulatory approvals, and is expected to close at the end of
 June or in July 2026.

 Evercore is acting as Financial Adviser and Eversheds Sutherland is acting as
 US Legal Adviser to JM in connection with the Transaction.

 The person responsible for the release of this announcement is Simon Price,
 General Counsel and Company Secretary of JM.

 ENDS

 

 Enquiries:
 Investor Relations
 Louise Curran       Head of Investor Relations                    +44 20 7269 8235
 Media
 Gill Corish         Head of External Communications (Interim)     +44 20 7269 8001
 Guy Bates           Kekst CNC                                     +44 7581 056 415

 

 

Johnson Matthey Plc is listed on the London Stock Exchange (JMAT)

Registered in England & Wales number: 00033774

Legal Entity Identifier number: 2138001AVBSD1HSC6Z10

 

 

 Notes:
 1.    Cormetech expected December 2026 EBITDA of approximately $35 million.
       Including $20 million of run-rate synergies, the acquisition multiple is
       c.6.5x EBITDA.
 2.    Orderbook represents orders due for delivery in 2026 and 2027.
 3.    Financials presented on a continuing, IFRS basis with period end of
       31-December.
 4.    Source: Advancy.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ACQEANSXALAKEFA



            Copyright 2019 Regulatory News Service, all rights reserved