Johnson Matthey has agreed to sell its Catalyst Technologies business to the American conglomerate, Honeywell, for £1.8bn.

The chemical technologies firm said the deal will deliver net sales proceeds of £1.6bn to the group, of which £1.4bn will be returned to shareholders after completion.

Following the deal, Johnson Matthey said it would be repositioned as a "highly streamlined group" focused on its Clean Air and PGMS businesses.

Chief executive officer at Johnson Matthey, Liam Condon, described the deal as a "significant milestone" in the history of the firm.

He said: "Following on from the divestment of our medical devices business at a highly attractive valuation, we have now agreed to the sale of our Catalyst Technologies business for £1.8bn. This allows Johnson Matthey to realise a very attractive valuation for this business that fully reflects its strong long-term growth prospects. We will now fundamentally re-shape Johnson Matthey into a more focused and leaner business.

"This will better position us to leverage our strong capabilities and leading market positions in Clean Air and PGMS to drive a step change in sustainable cash generation with higher returns to shareholders. Johnson Matthey is a great company and we are confident that the actions we have announced today will deliver substantial and sustainable value to our shareholders."

The announcement comes as the firm reported a 196% increase in its profit before tax to £486m, while its operating profit jumped by 116% in the year to 31 March, to £538m.

However, in this time, its revenue dropped by 9% to £11.6bn.

Following the respective announcements, shares in Johnson Matthey have increased by over 30%.

Investment director at AJ Bell, Russ Mould, added: "Johnson Matthey is following a well-trodden path of companies who veered out of their comfort zone, couldn’t make it work on a grand scale, and who are now retreating back to what they do best.

"Johnson Matthey is one of several companies on the UK stock market including Smith & Nephew which feel as if they’ve been in turnaround mode for years, but where progress has been slow. It’s been under pressure from activist investors to reshape the business and no doubt the latest disposal will have been influenced by such shareholders.

"The sharp rise in the share price implies that investors are happy with the new strategic move and its latest numbers."

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