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Honeywell International is to split into three independent businesses, breaking up one of the US’s last big industrial conglomerates just months after activist investor Elliott Management took a stake.
The company, which has a market valuation of $145bn, said on Thursday it would spin off its aerospace division from its automation business and progress plans to separate its advanced-materials operations.
The separation would result in three publicly listed “industry leaders with distinct strategies and growth drivers”, it said.
Honeywell shares reversed pre-market gains on Thursday after the company separately announced a worse than expected outlook for the year.
The break-up announcement comes after pressure last year from Elliott, which had called on Honeywell to end its conglomerate structure and split itself into two.
The activist investor had taken a $5bn stake in Honeywell in November, arguing that the group should follow the examples of General Electric, 3M and Johnson Controls which had split into separate businesses, unlocking value for shareholders.
Elliott welcomed the announcement on Thursday, saying that the separation would lead to “enhanced focus, alignment and strategic agility”, and would allow Honeywell to improve its operations and achieve a better valuation for the businesses.
Honeywell, led by chief executive Vimal Kapur since June 2023, subsequently announced in December that it was exploring a spin-off of its aerospace business, adding that it was also “evaluating more transformational changes”.
Honeywell had been on a dealmaking spree under Kapur, signing off on more than $9bn worth of acquisitions last year. It also shed assets that were not focused on three “megatrends”: automation, aviation and the transition to green energy. The group had already announced plans to spin off its advanced materials division in October.
Kapur said on Thursday that breaking Honeywell into three separate companies would “unlock significant value for shareholders and customers”.
The company said the three new companies would benefit from greater financial flexibility and more focused management attention.
Shares in Honeywell had underperformed the broader market before Elliott revealed its position last year.
The company’s high-margin aerospace business, which counts Boeing and Airbus among its customers and generated $15bn in revenues in 2024, makes up 40 per cent of the group’s annual revenues but has traded at a discount to pure aerospace competitors such as TransDigm.
Analysts have pointed to the stellar share price performance of GE’s aerospace business as a standalone company.
Honeywell said the separation of the aerospace and automation businesses should be completed by the second half of 2026 and would not result in a tax bill for its shareholders.
The company’s automation business reported revenues of $18bn last year. The smaller advanced materials division notched up about $4bn in revenues.
Honeywell separately forecast adjusted earnings of $10.10 to $10.50 a share for 2025, up 2 to 6 per cent, but falling short of analyst estimates. Its organic sales growth and free cash flow guidance also missed expectations.