Honeywell International is exploring the possibility of spinning off its aerospace business as part of a strategic review, following pressure from activist investor Elliott Investment Management to split the business.
The industrial conglomerate said Monday it will provide an update on its review when it reports fourth-quarter earnings in January.
Honeywell’s aerospace division, which makes aircraft engines, avionics and related systems, is the company’s largest revenue generator, with $11.47 billion in revenue over the first nine month of 2024, or approximately 40% of the company’s total sales. The unit supplies Boeing, Airbus and other major aircraft manufacturers and has benefited from increased aircraft production despite supply chain problems.
Analysts estimate that Honeywell’s aerospace division could be valued at between $90 billion and $120 billion as a standalone company.
About the company
Honeywell operates across multiple industries, including aerospace, automation, healthcare, building technology and energy solutions. The company designs and manufactures a wide range of products, from aircraft engines and avionics to building control systems, security equipment and industrial automation technologies.
Honeywell is also involved in quantum computing through its majority stake in Quantinuum.
It is headquartered in Charlotte, North Carolina.
The review
The review comes after Elliott revealed a $5 billion stake in Honeywell in October – its largest-ever investment in a single stock – and urged the company to split into two standalone businesses focused on aerospace and automation.
Elliott claimed the separation could increase the company’s stock price by 75%.
Honeywell has already made several strategic moves under the leadership of its CEO Vimal Kapur, who took over as CEO in 2023, including acquisitions and divestitures aimed at increasing its focus on aerospace, energy transition and energy systems. automation for buildings and factories.
Kapur described the company’s strategy as one of “meaningful transformation alternatives” and said Honeywell was exploring the options with “a granular exploration of their feasibility and possible timeline.”
Honeywell’s announcement received support from Elliott. “The portfolio transformation that Vimal and his team are leading represents the right path for Honeywell,” Elliott said in a statement.
Reaction
Barclays analyst Julian Mitchell interpreted the January market update commitment as a sign that a bigger breakup is likely. “Honeywell clearly states its willingness to consider greater strategic actions,” he wrote in a research note.
If Honeywell launches an aerospace spinoff, it would follow a broader trend among large U.S. conglomerates to simplify their business structures. Companies like General Electric and Dow Chemical have separated their major segments in recent years to increase profitability and streamline operations.
Honeywell shares are currently up 4.33% at US$237.48. The stock has gained 13.6% year to date (although lagging the S&P 500’s 28.3% rise).
