Honeywell has announced plans to separate its automation and aerospace technology divisions to create independent companies.
The planned separation, coupled with the previously announced plan to spin Advanced Materials, will be completed in the second half of 2026 and in a manner that is tax-free to Honeywell shareholders.
Honeywell CEO, Vimal Kapur, said the formation of three independent companies builds on the powerful foundation already created, positioning each to pursue tailored growth strategies, and unlock significant value for shareholders and customers.
"Our simplification of Honeywell has rapidly advanced over the past year, and we will continue to shape our portfolio to create further shareholder value,” Kapur said.
“We have a rich pipeline of strategic bolt-on acquisition targets, and we plan to continue deploying capital to further enhance each business as we prepare them to become leading, independent public companies."
Kapur said the three independent companies will be appropriately capitalized with the financial flexibility to take advantage of future growth opportunities.
Honeywell Automation will maintain global scale, with 2024 revenue of $18 billion.
With $15 billion in annual revenue in 2024 and a large, global installed base, Honeywell Aerospace will be one of the largest publicly traded, pure play aerospace suppliers in the market.
Finally, Advanced Materials generated nearly $4 billion in revenue last year with brands such as the low GWP Solstice hydrofluoro-olefin (HFO) technology.
As a standalone company with a large-scale domestic manufacturing base, Kapur said it will be more flexible with an optimised capital allocation strategy.
Honeywell remains on track to exceed its commitment to deploy at least $25 billion toward high-return capital expenditures, dividends, opportunistic share purchases and accretive acquisitions through 2025.
“The company intends to continue its portfolio transformation efforts during the separation planning process to enhance the value proposition of each business,” he said.
Since December 2023, Honeywell has announced a number of strategic actions to drive organic growth and simplify its portfolio. This includes approximately $9 billion of accretive acquisitions:
Elliott Partner Marc Steinberg said the enhanced focus, alignment, and strategic agility enabled by this separation will allow Honeywell to realise the opportunity for operational improvement and valuation upside.