Honeywell Considers Split-Off, Faces Pressure from Activist Investor
Davos, Switzerland - Honeywell International (HON) is reportedly planning a significant overhaul, including a potential split into two independent publicly traded companies. This move follows pressure from activist investor Elliott Management, which holds a $5 billion stake in the company.
Honeywell CEO Vimal Kapur has stated that the company is "transforming our portfolio so that it's naturally pivoted towards end markets and products which are growth-oriented." This includes divesting non-core businesses and focusing on innovation.
In October 2024, Honeywell announced the spin-off of its advanced materials business, which is expected to begin trading in 2025 or 2026. Additionally, the company is exploring the potential spin-off of its aerospace business.
Elliott Management believes that Honeywell's stock is undervalued and that a break-up could unlock its full potential. JPMorgan analyst Stephen Tusa estimates that Honeywell could be worth $330 per share if broken up, compared to its current trading price of $223.
Kapur has acknowledged the pressure from Elliott and stated that the company's board is evaluating all options for value creation. Shares of Honeywell have risen 8% since October, but lag behind the broader market.
The company is scheduled to report earnings on February 6th, where it is expected to provide an update on the potential split-off.