The powerful industrial giant, Honeywell, has made a surprising announcement of undergoing a mysterious transformation. Aerospace titan Honeywell revealed on Thursday its decision to divide into three independent and publicly traded companies. This transformative step will result in the creation of Honeywell Automation and Honeywell Aerospace, alongside the previously disclosed spin-off of Advanced Materials.
Vimal Kapur, Chairman and CEO of Honeywell, emphasized the significance of this strategic move in a press release, stating, “The formation of three independent, industry-leading companies builds on the powerful foundation we have created, positioning each to pursue tailored growth strategies, and unlock significant value for shareholders and customers.”
The separation process of the two newly established companies is slated for completion in the latter half of 2026 and will be executed tax-free for Honeywell shareholders. Simultaneously, the spin-off of the Advanced Materials company is projected to conclude by the end of 2025 or early 2026.
Here’s an overview of the roles and focus areas of the three new entities:
– : This company will specialize in providing automation solutions, particularly assisting factories and warehouses in streamlining their operations. The sector is currently grappling with subdued demand as the surge in e-commerce, driven by the pandemic, stabilizes.
– **Honeywell Aerospace**: Positioned as a “pure play aerospace” supplier, this company will serve as the primary revenue driver for Honeywell, contributing approximately 40% to the overall revenue in 2024. Major clients include Boeing and Airbus.
– **Advanced Materials**: Honeywell’s Advanced Materials segment will evolve into a “sustainability-focused specialty chemicals and materials” company. This sector generated nearly $4 billion in revenue the previous year.
The decision to split the company follows pressure from activist investor Elliott Management, who acquired a $5 billion stake in Honeywell. Despite incremental efforts, Elliott believed that a split was necessary due to the company’s underperformance in the market. This move echoes past instances of activist demands for restructuring, such as Daniel Loeb’s Third Point’s call for the spin-off of Honeywell’s aerospace division in 2017.
(Source: Reuters, originally published on USA TODAY)
