Honeywell Announces Three-Way Split, Stock Falls
KEY TAKEAWAYS
- Honeywell International, the storied conglomerate which launched a strategic review early last year, announced plans Thursday to split into three independent companies.
- The conglomerate said it is planning to separate its aerospace division from its automation business and would proceed with plans to spin off its advanced-materials arm.
- The plan by Honeywell, which has been facing pressure from activist investor Elliott Investment Management to split up, follows industrial conglomerate General Electric’s three-way breakup last year.
Honeywell International (HON) said Thursday it will split into three independent companies, becoming the latest storied conglomerate to plan a breakup.
Shares in Honeywell, which has been undergoing a strategic review of its operations, were volatile in premarket trading, reversing earlier gains to fall more than 2%.
The conglomerate said it is planning to separate its aerospace division from its automation business and would proceed with plans to spin off its advanced-materials arm. The aim, the company said, is to create three standalone public companies that among other things will have a “simplified strategic focus” as well as increased financial flexibility. The break out of the automation and aerospace businesses will be completed by the second half of 2026.
“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,” Chief Executive Officer (CEO) Vimal Kapur said, adding that the companies had a “rich pipeline of strategic bolt-on acquisition targets.”
Honeywell Projects 2%-6% Adjusted EPS Gains Next Year
The announcement follows the completion last year of General Electric’s three-way breakup as well as pressure from activist investor Elliott Investment Management for Honeywell to split. Elliott Partner Marc Steinberg and Managing Partner Jesse Cohn backed the split plan Thursday and said in the Honeywell press release that the company’s breakup would offer “valuation upside.”
Honeywell reported mixed results for the fourth quarter. Its fourth-quarter revenue of $10.1 billion, up 7% year-over-year, and adjusted earnings per share (EPS) of $2.47 topped Visible Alpha estimates. EPS of $1.96 undershot forecasts, however. Honeywell said it expects 2025 adjusted EPS of between $10.10 and $10.50, up between 2% and 6%.
The Wall Street Journal previously reported the breakup plan. Its report said that GE’s aerospace, energy and healthcare units, which now trade separately, have a market value nearly four times that of GE in 2022 before the breakup. Honeywell shares are up 15% in the past year through Thursday.
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