Honeywell International Inc., a conglomerate with diverse businesses including aerospace and building technologies, announced on February 6, 2025, its plan to split into three independent, publicly traded companies. This decision follows pressure from activist investor Elliott Investment Management, which had acquired a stake in Honeywell valued at over $5 billion. This marks a significant change for one of America's last major conglomerates, following the path of companies like General Electric and United Technologies Corp. The aim is to unlock shareholder value, enhance operational focus, and allow each new entity to better target its core markets.
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The restructuring will create Honeywell Automation, focusing on industrial automation, control systems, and digital solutions, with about $18 billion in 2024 revenue; Honeywell Aerospace, continuing its leadership in aerospace technologies like avionics and engines, with 2024 revenues of around $15 billion; and Honeywell Advanced Materials, concentrating on sustainable chemicals and materials, generating nearly $4 billion last year. The market's reaction was mixed, with Honeywell's stock initially declining due to concerns about its 2025 outlook. The split is expected to conclude by the second half of 2026, subject to regulatory and other customary conditions.
Elliott had criticized Honeywell's conglomerate structure, suggesting that separate, industry-focused entities could realize more value. This could lead to higher stock prices for each new company. Vimal Kapur, Honeywell's Chairman and CEO, stated that this transformation would enable each new company to pursue tailored growth strategies, enhancing value for shareholders and customers. This reflects a broader industry trend towards specialization, influenced by investor preferences for focused business models.
The potential benefits include better sector-specific focus, operational efficiencies, and more accurate market valuations. However, challenges like managing the transition, tax implications, and establishing each company's independent identity remain. As Honeywell moves forward with this overhaul, it will be a litmus test for other conglomerates contemplating similar strategies in response to activist investors and changing market dynamics. The outcome of this restructuring will likely have a lasting impact on corporate strategies across various industries.