Honeywell International is exploring the potential separation of its aerospace business as part of a strategic review, following pressure from activist investor Elliott Investment Management to split the company.
The industrial conglomerate announced on Monday that it will provide an update on its review during its fourth-quarter earnings report in January.
Honeywell’s aerospace division, which makes aircraft engines, avionics, and related systems, is the company’s largest revenue generator, with US$11.47bn in revenue during the first nine months of 2024, roughly 40% of the company’s total sales. The unit supplies Boeing, Airbus, and other major aircraft manufacturers, and has benefited from rising aircraft production despite supply chain issues.
Analysts have estimated that Honeywell’s aerospace division could be valued between US$90bn and US$120bn as a standalone business.
About the company
Honeywell operates across multiple sectors, including aerospace, automation, healthcare, building technologies, and energy solutions. The company designs and manufactures a wide range of products, from aircraft engines and avionics to building control systems, safety equipment, and industrial automation technologies.
Honeywell is also involved in quantum computing through its majority stake in Quantinuum.
It’s headquartered in Charlotte, North Carolina.
The review
The review comes after Elliott revealed a US$5bn stake in Honeywell in October — its largest-ever investment in a single stock — and urged the company to split into two standalone businesses focused on aerospace and automation.
Elliott claimed that the separation could increase the company’s share price by 75%.
Honeywell has already pursued several strategic moves under Chief Executive Officer Vimal Kapur, who took over as CEO in 2023, including acquisitions and divestments aimed at sharpening its focus on aerospace, energy transition, and automation systems for buildings and factories.
Kapur described the company’s strategy as one of “significant transformational alternatives” and said Honeywell is exploring options with “granular exploration of their feasibility and possible timing”.
Honeywell’s announcement drew support from Elliott. “The portfolio transformation Vimal and his team are leading represents the right course for Honeywell,” Elliott said in a statement.
Reaction
Barclays analyst Julian Mitchell interpreted the commitment to update the market in January as a signal that a larger breakup is likely. “Honeywell is clearly stating its willingness to contemplate bigger strategic moves,” he wrote in a research note.
If Honeywell proceeds with an aerospace spinoff, it would follow a broader trend among large US conglomerates to simplify their business structures. Companies like General Electric and Dow Chemical have spun off core segments in recent years to boost profitability and streamline operations.
Shares of Honeywell are currently 4.33% higher at US$237.48. The stock has gained 13.6% year to date (though lagging behind the S&P 500’s 28.3% rise).