Honeywell Plans Breakup Under Pressure From Elliott

(Bloomberg) — Honeywell International Inc. is poised to proceed with a breakup following pressure from activist Elliott Investment Management to split, people familiar with the matter said.

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The Charlotte, North Carolina-based industrial conglomerate is planning to split into two independent publicly traded companies, one focused on automation and the other on aerospace and defense, according to the people.

Honeywell could formally announce the plans with its fourth-quarter earnings, which are scheduled to be released in early February, the people said, asking not to be identified discussing confidential information. The final details will need to be signed off by the company’s board, they said.

Shares of Honeywell rose as much as 5% on Monday. The stock was up 0.6% at 2:26 p.m. in New York, giving the company a market value of about $143 billion. Honeywell’s shares are up about 11% over the last 12 months, trailing the 22% gain in the S&P 500 for the period.

In December, Honeywell said it was exploring a separation of its aerospace business as part of a broader review of its operations. It said at the time that it would provide an update with its fourth quarter earnings. A month earlier, Bloomberg News reported that Elliott had built a $5 billion-plus position in Honeywell — its largest ever in a single stock — and was pushing the company to pursue a breakup.

Under its Chief Executive Officer Vimal Kapur, Honeywell had already been taking steps to reshape its portfolio and streamline its holdings. In October, the company announced plans to spin off its advanced materials division.

A larger breakup could generate considerable upside, analysts say. In a report last month, analysts at Barclays Plc estimated a sum-of-the-parts valuation of about $270 a share for the Honeywell assets, based on free cash flow expectations. That’s well above the company’s $218.19 closing price on Jan. 10. In a separate note, Jefferies Financial Group Inc. analyst Sheila Kahyaoglu said the aerospace business alone could be worth more than $90 billion.

Honeywell’s deliberations are ongoing and the details and timing of the separation could still change, the people said. A representative for Honeywell referred to the company’s December statement and declined to comment further. A spokesperson for Elliott declined to comment.

A number of large industrial conglomerates have pursued high-profile breakups in recent years. General Electric Co. split itself into three parts by spinning off its health-care business in 2023 and its energy arm last year. Dan Loeb’s Third Point LLC built a stake in Honeywell in 2017 and called for the company to spin off its aerospace division.

–With assistance from Kiel Porter, Crystal Tse and Richard Clough.

(Updates shares in fourth paragraph.)