Honeywell May Withdraw from Johnson Matthey Acquisition? Catalyst Market in Turmoil

Reports that U.S. conglomerate Honeywell International is considering withdrawing from its acquisition of the catalyst business of UK specialty chemicals giant Johnson Matthey have sent shockwaves through the global chemical industry and M&A market. This deal, viewed as a strategic move for catalyst technology central to the clean energy transition, now faces increasing uncertainty.

According to a Bloomberg report (February 21, 2026), Honeywell is exploring the possibility of withdrawing its acquisition proposal for Johnson Matthey's catalysts business. This news immediately impacted Johnson Matthey's stock price and has raised concerns among investors. Initially, this acquisition was seen as offering significant strategic benefits for both companies.

• Honeywell: Strengthening its position in the growing fields of sustainable technologies and clean energy-related businesses.
• Johnson Matthey: Focus on core businesses, improve financial position, and divest non-core assets.

However, the possibility of the deal falling through has once again highlighted valuation gaps in the M&A market, regulatory challenges, and macroeconomic uncertainties. Particularly in large cross-border M&A transactions, unexpected issues are frequently uncovered during the due diligence process.

This development suggests not merely the collapse of an individual deal, but the complexity and risks inherent in the current global M&A market. Attention now turns to the future moves of both companies and the restructuring of the catalyst market.

Strategic Intentions and Challenges

Behind these acquisition negotiations lay distinct strategic intentions for both Honeywell and Johnson Matthey. However, various challenges appeared to stand in the way of their realization.

Honeywell's Perspective

Honeywell is a conglomerate with diverse businesses spanning aerospace, building technologies, and performance materials. In recent years, it has positioned sustainability and digitalization as its two pillars of growth, accelerating investment in clean energy-related technologies in particular. Johnson Matthey's catalysts business was highly compatible with Honeywell's future growth areas, such as hydrogen production, fuel cells, and recycling technologies.

• Objective: Expand portfolio, strengthen competitiveness in green technology market, and integrate R&D capabilities.
• Background for considering withdrawal:
• Overvaluation: Due diligence may have revealed a gap between the initial valuation and actual conditions.
• Regulatory approval: The antitrust approval process may have been more complex than anticipated.
• Difficulty of business integration: Risks associated with integrating different corporate cultures and technological platforms.
• Changes in market environment: Deterioration of macroeconomic environment, such as high inflation and rising interest rates, affecting acquisition financing.

Johnson Matthey's Perspective

Johnson Matthey is a global leader in catalyst technologies utilizing platinum group metals. However, in recent years, it has been reviewing its business portfolio, focusing on strengthening its financial position and concentrating on growth areas through divestments of non-core businesses, notably exiting the battery materials business. The sale of its catalysts business was also part of this strategy.

• Objective: Enhance corporate value through selection and concentration; reinvest proceeds into growth areas (e.g., medical technology, hydrogen technology).
• Impact of the Deal's Collapse:
• Negative impact on stock price: Diminished expectations for financial improvement through sale proceeds.
• Strategy reassessment: Reevaluation of the future direction for the catalyst business that could not be sold.
• Search for a new buyer: The need to seek other strategic partners.

It is clear that the success or failure of this deal was a critical turning point for both companies, significantly influencing their future corporate strategies. For Johnson Matthey in particular, it could impact the pace of its business restructuring.

Ripple Effects on the M&A Market and Future Developments

The developments surrounding the Honeywell and Johnson Matthey deal offer important insights for the global M&A market as a whole. The current M&A environment, in particular, faces complex factors that differ from those of recent years.

M&A Market Trends

In recent years, the global M&A market has seen increased uncertainty due to a combination of factors: rising interest rates, geopolitical risks, inflationary pressures, and tightening regulations. This has led to a growing tendency for valuation gaps to emerge between buyers and sellers regarding corporate value, resulting in longer negotiations or, ultimately, a higher number of deals falling through.

• Rising Acquisition Costs: Higher interest rates increase the cost of financing acquisitions.
• Stringent Due Diligence: Review criteria have diversified to include ESG (Environmental, Social, and Governance) factors and cybersecurity risks.
• Geopolitical risks: Political factors, such as supply chain restructuring and investment restrictions in specific countries, impact M&A.

Honeywell's case exemplifies the challenges of large-scale deals in this market environment. Even when strategic alignment appears strong, practical considerations and shifts in the economic landscape can derail plans.

The Future of Johnson Matthey's Catalysts Business

If Honeywell withdraws, what path might Johnson Matthey's catalysts business take?

• Search for a New Buyer: Other major chemical companies or private equity funds may still show interest. However, the fact that negotiations broke down once could impact future discussions.
• Maintaining Independence: The option to abandon the sale and retain the business internally also exists. In that case, Johnson Matthey would need to restructure its investment strategy for the catalysts business and enhance its profitability.
• Spin-off Potential: A "spin-off"—separating and listing it as an independent company—could also be an option.

In any case, Johnson Matthey will likely be required to present a clear vision and viable strategy for its catalysts business going forward. The market is watching closely for the company's next move.

Perspectives on Global Industrial Restructuring and Implications for Japanese Companies

The Honeywell-Johnson Matthey deal can be understood within the broader context of global industrial restructuring. This case offers numerous implications for Japanese companies.

Trends in Global Industrial Restructuring

Currently, major global industries face three major trends: decarbonization, strengthening supply chain resilience, and digital transformation. In core industries like chemicals, materials, and energy, companies are actively optimizing their business portfolios and acquiring new technologies through M&A to respond to these changes.

• Environmental Response: Accelerated investment in clean energy and recycling technologies.
• Supply Chain Resilience: Mitigating concentration risks in specific regions and in-sourcing technology.
• Technological Innovation: M&A to incorporate future technologies like AI, IoT, and advanced materials.

Catalyst technology is a foundational technology supporting the sustainability of a wide range of industries, from automotive exhaust purification to petroleum refining, chemical manufacturing, and even clean energy fields like hydrogen production. M&A activity in this sector symbolizes the very transformation of modern industrial structures.

Implications for Japanese Companies

Many Japanese companies are similarly advancing efforts to enhance global competitiveness and reform their business structures. This case study offers several key lessons, particularly for Japanese companies considering cross-border M&A.

• The Importance of Thorough Due Diligence: Requires expertise and time to conduct a multifaceted assessment of not only financials but also technology, regulations, culture, and integration risks.
• Pursuit of Appropriate Valuation: Conduct a calm and realistic corporate valuation without being swept up in market euphoria. Incorporate post-acquisition synergy effects while appropriately reflecting risk premiums.
• Flexibility in M&A Strategy: Clearly define alternative options and exit criteria in advance for when negotiations become difficult. A flexible strategy capable of adapting to changing market conditions is essential.
• Communication with Stakeholders: Fulfill transparent accountability to the market and employees regarding the negotiation process and outcomes.

The wave of global industrial restructuring will continue. For Japanese companies to navigate this change and achieve sustainable growth, they will need the insight and execution capability to leverage M&A not merely as a "transaction," but as a strategic "management tool" to its fullest potential. The future industrial landscape depends precisely on the decisions we make right now.