Johnson Matthey strikes deal to buy US catalyst maker to tap into data centre market
Speciality chemicals firm Johnson Matthey has struck a deal worth up to $460m (£343m) to buy a US catalyst maker in a bid to tap into surging global demand for data centres.
It has announced the acquisition of Cormetech, a firm it said has been growing in the US power generation market and has the potential to meet a roughly one billion dollar (£750m) pipeline of work.
The deal values Cormetech at $360m (£269m) but with the potential to pay out up to an additional $100m (£75m) if the firm meets specific financial performance targets.
It comes after Johnson Matthey recently agreed the sale of Catalyst Technologies for £1.3bn, having cut the sale price from £1.8bn to reflect the business’s performance.
It is waiting to get the greenlight from a regulator for the sale to complete.
The London-listed company said acquiring Cormetech will expand its clean air solutions arm and meet demand for technologies for data centres.
Data centres are being rapidly rolled out around the world, particularly in the US, and are used to power digital services including, increasingly, artificial intelligence (AI).
Johnson Matthey said Cormetech has approximately $300m (£224m) worth of orders secured for the next two years and a roughly one billion dollar (£750m) pipeline of projects, primarily relating to data centres in the US.
Campaigners in the UK and Ireland have raised concerns about data centres, with opponents pointing to their high use of energy and the prospect of them being built on green belt land.
Meanwhile, Johnson Matthey revealed its pre-tax profit tumbled by 77 per cent to £91m in the year to the end of March, compared with the previous year.
On an underlying basis, which strips out what it views as one-off costs, profits grew by 11 per cent to £271m.
The group said the conflict in the Middle East had not affected its finances in recent months, but cautioned that its “performance may be impacted by the future impact on global demand, supply chains and inflation”.
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.”