Honeywell's Planned Split: A Portfolio Reassessment
Honeywell (HON) is undergoing a comprehensive overhaul under the leadership of CEO Vimal Kapur. The industrial giant is pivoting its portfolio towards growth-oriented markets and enhancing its capabilities in new product development and innovation.
Kapur, who joined Honeywell in 1989, has identified the need to adjust the company's portfolio to drive growth. This strategy includes the spin-off of its advanced materials business, which is expected to be completed by early 2026, generating $3.8 billion in annual revenue.
Recent reports suggest that Honeywell is considering a further split into two separate publicly traded entities, separating its automation and aerospace divisions. While no official announcement has been made, the move is in line with Honeywell's previous exploration of an aerospace spin-off.
Honeywell faces pressure from activist investor Elliott Management, which holds a $5 billion stake in the company. Elliott may perceive Honeywell's stock as lagging behind the market due to overlapping businesses.
Industry analysts estimate that Honeywell could command a higher valuation if broken up, with JPMorgan's Stephen Tusa suggesting a potential value of $330 per share compared to its current trading price of $223.
Kapur acknowledges the need to re-evaluate the company's processes and operating system, stating that "everything at a certain point gets mature." Honeywell's board is expected to continue assessing value creation options and may consider the activist plan.