Honeywell to separate into three independently listed corporations in newest company breakup
By Utkarsh Shetti
(Reuters) -Honeywell mentioned on Thursday it’ll break up into three independently listed corporations, breaking apart certainly one of America’s final standing conglomerates simply months after activist investor Elliott Administration took a $5 billion stake within the industrial large.
Honeywell’s shares, nonetheless, fell practically 5% in premarket commerce, paring early positive factors after the corporate forecast downbeat gross sales and revenue for 2025.
The corporate mentioned it’ll separate its aerospace and automation companies into separate entities, alongside its beforehand introduced spin-off of the superior supplies unit.
The commercial and aerospace large has been on a deal-making spree below CEO Vimal Kapur, shedding property that aren’t centered on the aviation, automation and vitality sectors.
Regardless of a number of smaller strikes, Elliott, whose stake in Honeywell is its largest single funding, argued the corporate wanted to separate.
Honeywell attracted Elliott’s consideration as its inventory value underperformed the market. Its shares had risen 7.7% in 2024 till November 11, a day earlier than Elliott disclosed its place, whereas the broader market had gained 26.6% in the identical interval.
Analysts had beforehand estimated Honeywell’s high-margin aerospace enterprise might be price between $90 billion and $120 billion, together with debt.
The airline trade, confronted with a scarcity of recent jets, has needed to resort to flying older, extra maintenance-intensive planes throughout a journey growth, pushing up gross sales for gamers resembling Honeywell that present aftermarket companies and elements.
The aerospace unit is Honeywell’s greatest income generator, accounting for about 40% of the corporate’s whole income in 2024, and counts Boeing and Airbus amongst its clients. It additionally has contracts with the U.S. authorities, offering communication and navigation techniques, amongst different companies.
Honeywell had introduced plans to spin off its superior supplies unit right into a publicly traded firm in October. It mentioned in December it was contemplating a derivative of its aerospace enterprise, after Elliott’s push.
The corporate mentioned it intends to finish the separation within the second half of 2026, which might be tax-free to its shareholders.
Elliott’s push will not be the primary time Honeywell has confronted activist strain to interrupt up the corporate. In 2017, it managed to shrug off Daniel Loeb’s Third Level, which urged the corporate to spin off its aerospace division.
With Honeywell’s choice, the ranks of the nation’s main industrial conglomerates have dwindled even additional, following related selections in recent times by 3M, Basic Electrical and United Applied sciences to separate off main divisions.
