Honeywell has announced that it will split into three separate publicly listed companies in a move that could be seen as following in the footsteps of industry leaders such as 3M, General Electric, and United Technologies.
The decision to split the business comes just after activist investor Elliott Investment Management acquired a $5 billion stake in Honeywell in November of last year.
At the time, Elliott recommended a simplification of Honeywell's conglomerate structure citing that this structure no longer suits the business and that Honeywell will realise its full potential by separating aerospace and automation.
The new structure is expected to benefit the company, similar to many other large businesses that have moved away from the conglomerate model, such as General Electric (GE) and United Technologies.
In 2021, GE announced the separation of its business into GE HealthCare, GE Vernova, and GE Aerospace.
The company completed the spin-off of GE HealthCare in 2023 and GE Vernova in 2024, bringing an end to its conglomerate structure.
Currently, GE's three stand-alone businesses together have a market value nearly four times bigger than GE as a single company in 2022, according to a report in the Wall Street Journal.
Honeywell
The separation of Honeywell's aerospace and automation business would result in share-price gains of 51% – 75% over the next two years, according to estimates from Elliott.
The planned separation will create three independent entities in automation, aerospace, and advanced materials.
Each company will have distinct strategies and growth drivers and the separation is intended to be completed in the second half of 2026 in a manner that is tax-free to Honeywell shareholders, the company noted.
"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," said Vimal Kapur, chair and CEO of Honeywell.
Elliott Partner Marc Steinberg and Managing Partner Jesse Cohn, stated, "The enhanced focus, alignment, and strategic agility enabled by this separation will allow Honeywell to realise the opportunity for operational improvement and valuation upside.
"We look forward to continuing to support Vimal and the management team as they execute the separation and deliver significant long-term value to Honeywell's shareholders."
