In a strategic move to refocus its priorities, industrial giant Honeywell has announced plans to spin off its cutting-edge materials division into a separate, publicly traded entity. This bold decision aims to streamline the company’s operations, allowing it to concentrate on three key areas: aviation, automation, and energy transition.
The materials unit, valued at a staggering $11 billion by Barclays, provides specialized products to a diverse range of industries, including those manufacturing bullet-resistant armor and pharmaceutical packaging. According to CEO Vimal Kapur, “The sustained market demand for advanced specialty chemicals and materials makes this the ideal time for our business to thrive independently.”
Since taking the reins last year, Kapur has been instrumental in shifting Honeywell’s focus towards emerging mega trends. This strategic pivot has already led to significant investments, including the acquisition of Carrier’s security business for $4.95 billion and aerospace and defense firm CAES Systems for $1.9 billion.
The spin-off, expected to be completed by the end of 2025 or early 2026, will be tax-free for Honeywell’s shareholders. The company plans to appoint a dedicated management team and board for the new entity in the coming months. Projections indicate that the advanced materials business will generate revenue of $3.7 billion to $3.9 billion in fiscal 2024, with an operating margin exceeding 25%.
Despite trimming its annual profit forecast in July due to weak demand in its industrial automation segment, Honeywell’s shares have seen a 2% uptick in premarket trading. However, they remain down approximately 3% for the year.
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