Major Shake-Up Ahead for Honeywell International Inc.
Pressure Mounts for Breakup
Honeywell International Inc. is on the verge of a significant transformation, driven by activist investor Elliott Investment Management’s push for a split. According to insiders, the Charlotte, North Carolina-based industrial conglomerate plans to divide into two independent publicly traded companies, focusing on automation and aerospace and defense, respectively.
A New Chapter Unfolds
The company is expected to officially announce its plans alongside its fourth-quarter earnings, scheduled for early February. While the final details require approval from Honeywell’s board, the move could have a profound impact on the company’s future. Shares of Honeywell surged as much as 5% on Monday, with the stock currently valued at around $143 billion.
A Broader Review of Operations
In December, Honeywell announced it was exploring a separation of its aerospace business as part of a comprehensive review of its operations. This move follows a broader trend of industrial conglomerates pursuing high-profile breakups in recent years, such as General Electric Co.’s split into three parts.
Elliott’s Influence
Elliott Investment Management, which built a $5 billion-plus position in Honeywell, has been instrumental in driving the company towards a breakup. Under CEO Vimal Kapur, Honeywell has already taken steps to reshape its portfolio and streamline its holdings, including plans to spin off its advanced materials division in October.
Analysts Weigh In
Industry analysts believe a larger breakup could generate significant upside. Barclays Plc estimates a sum-of-the-parts valuation of around $270 a share for Honeywell assets, based on free cash flow expectations. Jefferies Financial Group Inc. analyst Sheila Kahyaoglu suggests the aerospace business alone could be worth more than $90 billion.
Ongoing Deliberations
While Honeywell’s deliberations are ongoing, the details and timing of the separation could still change. A representative for Honeywell referred to the company’s December statement, declining to comment further. Elliott also declined to comment on the matter.
A New Era for Honeywell
As Honeywell navigates this significant transformation, one thing is clear: the company is poised for a major shake-up. With its shares up about 11% over the last 12 months, investors will be watching closely to see how this breakup unfolds.
Leave a Reply