Honeywell Plans Major Shakeup Amidst Activist Pressure
Davos, Switzerland - Industrial giant Honeywell (HON) is undergoing a significant restructuring, prompted by both internal initiatives and external pressures.
Honeywell CEO Vimal Kapur has been driving a transformation strategy focused on growth-oriented end markets and product innovation. However, the company has also faced scrutiny from activist investor Elliott Management, which holds a $5 billion stake and views Honeywell's portfolio as underperforming.
As a result, Honeywell is reportedly planning to split into two independent entities: an automation division and an aerospace division. This follows a previously announced plan to spin off its advanced materials business by the end of 2025 or early 2026.
Kapur has stated that the company is evaluating the potential spin-off of its aerospace business, with an update expected during the upcoming earnings call on February 6th.
Analysts estimate that Honeywell could be worth significantly more if broken up, with JPMorgan industrials analyst Stephen Tusa valuing it at $330 per share compared to its current trading price of $223.
Honeywell's board of directors is actively considering all value creation options, including those proposed by Elliott Management, according to Kapur.
"Our processes and operating system are sound, but there's an opportunity to relook at things and evaluate our strategy for growth," said Kapur.
Honeywell's share price has risen 8% since late October, but lags behind the market's 144% gain over the past five years.