Industrial powerhouse Honeywell announced its intent to split into three separate companies on Thursday.
Following the completion of a comprehensive business portfolio evaluation, Honeywell's Board of Directors looks to split the industry giant's offerings into three entities: Automation, Aerospace Technologies, and Advanced Materials. The company confirmed that the transition, which is planned to resolve in the second half of 2026, will remain tax-free to Honeywell shareholders. The Advanced Materials spin-off is expected to be complete as early as late 2025 or early 2026.
"The formation of three independent, industry-leading companies builds on the powerful foundation we have created, positioning each to pursue tailored growth strategies and unlock significant value for shareholders and customers," said Vimal Kapur, Chairman and CEO of Honeywell. "Our simplification of Honeywell has rapidly advanced over the past year, and we will continue to shape our portfolio to create further shareholder value. 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 has helmed the effort to simplify Honeywell's portfolio via strategic acquisitions to the tune of $9 billion to drive organic growth. The $4.95 billion purchase of Carrier's access solutions businesses in late 2023—which includes names like Supra, Onity, and LenelS2—will help sustain the new Automation business.
Honeywell's Automation segment provides industrial automation technologies ideal for buildings, factories, and warehouses. With $18 billion in revenue in 2024, it is already operational on a global scale.
"Building on decades of innovation as its heritage, Honeywell Automation will create the buildings and industrial infrastructure of the future, leveraging process technology, software, and AI-enabled, autonomous solutions to drive the next generation of productivity, sustainability, and safety for our customers," Kapur added. "As a standalone company with a simplified operating structure and enhanced focus, Honeywell Automation will be better able to capitalize on the global megatrends underpinning its business, from energy security and sustainability to digitalization and artificial intelligence."
Elliott Investment Management L.P., an investor managing a $5 billion stake in the company, previously sent a letter to Honeywell's Board of Directors recommending the splitting off of its Aerospace and Automation businesses, citing increased flexibility, simplified strategic focus, and improved capital allocation as key benefits of this action. This mirrors moves made by conglomerates like General Electric, which ended its 132-year reign with its own three-way split in April 2024.
Honeywell confirmed its commitment to continuing the deployment of at least $25 billion toward high-return capital expenditures, dividends, opportunistic share purchases, and accretive acquisitions through 2025. Simplification efforts will continue throughout the separation planning process.
"With today's action, Honeywell will be separating its Automation and Aerospace businesses into two market-leading enterprises poised for sustained growth and value creation," said Elliott Partner Marc Steinberg and Managing Partner Jesse Cohn. "The enhanced focus, alignment, and strategic agility enabled by this separation will allow Honeywell to realize the opportunity for operational improvement and valuation upside. We look forward to continuing to support Vimal and the management team as they execute on the separation and deliver significant long-term value to Honeywell's shareholders."
Despite the increased value generation expected after the split, Honeywell's premarket share price dropped over 2% following the announcement.
