Activist Investor Seeks Breakup Of Honeywell

Core Viewpoint - Activist investor Elliott Investment Management LP is advocating for Honeywell International Inc. to spin off its Aerospace Technologies business, arguing that this separation could enhance performance and shareholder value [1][2][10]. Spin-Off Proposal - Elliott proposes that Honeywell be divided into two independent entities: one focused on automation, energy, and sustainability solutions, and the other on aerospace [2][10]. - The separation is expected to create two sector-leading companies, potentially increasing Honeywell's share price by 51% to 75% over the next two years [3][10]. Financial Performance and Market Position - Honeywell's Aerospace segment generated $13.6 billion in sales in 2023, accounting for approximately 37% of total revenue [8]. - The Aerospace division has experienced stagnant sales with a compound annual growth rate (CAGR) of -0.58% from 2018 to 2023, and margins have remained around 28% [9][10]. - Challenges such as supply chain disruptions and geopolitical tensions have impacted the Aerospace segment's performance [9]. Business Structure Post-Separation - Post-separation, the Aerospace business (SpinCo) will focus on products and services including auxiliary power units, propulsion engines, and integrated avionics [4][12]. - The remaining Honeywell (RemainCo) will concentrate on automation and energy transition, structured into three segments: industrial automation, building automation, and energy and sustainability solutions [5][11]. Management Response - Honeywell's management has acknowledged Elliott's views and expressed willingness to discuss the matter further, indicating that they had not been contacted prior to Elliott's letter [6].