Elliott Sends Letter to the Board of Directors of Honeywell International Inc.

Core Viewpoint - Honeywell is facing challenges due to its conglomerate structure, which has led to inconsistent financial results and an underperforming share price, prompting a call for simplification through the separation of its Aerospace and Automation divisions [1][7][30]. Group 1: Investment Opportunity - Elliott Investment Management has invested over $5 billion in Honeywell, becoming its largest active investor, and believes there is a significant opportunity for value creation through a separation of its business units [5][64]. - A separation could lead to share price gains of 51% to 75% over the next two years, reflecting the potential for improved operational performance and valuation for both Aerospace and Automation as standalone entities [4][80]. Group 2: Current Performance and Challenges - Honeywell has experienced uneven execution and inconsistent financial results over the past five years, resulting in a decline in its share price and overall underperformance compared to peers [7][23][26]. - The conglomerate structure has led to operational challenges, with smaller business units lacking management attention and larger units competing for investment, hindering overall performance [37][41]. Group 3: Benefits of Simplification - Separating into two independent companies would allow for enhanced strategic focus, improved capital allocation, and better operational performance, as evidenced by other companies that have successfully simplified their structures [3][35][36]. - A simplified investment narrative would likely attract more investor interest, as the current conglomerate model is viewed as less attractive compared to pure-play companies [54][56]. Group 4: Market Position and Valuation - Honeywell Aerospace is positioned as a top-five global aerospace supplier with strong aftermarket revenue, while Honeywell Automation is expected to be a significant player in the automation sector, with nearly$ 20 billion in annual revenue [64][70]. - Despite its strong market position, Honeywell currently trades at a discount compared to its peers, indicating a disconnect between its operational capabilities and market valuation [26][58]. Group 5: Path Forward - The recommendation is for Honeywell to pursue a separation of its Aerospace and Automation divisions to unlock value and improve operational focus, aligning with market trends favoring simplified business structures [84][85]. - The current market environment presents a favorable opportunity for such a separation, as investor preferences have shifted towards pure-play companies that can deliver better performance and returns [68][69].