Honeywell's Bold Move Breaking Up the Conglomerate This title effectively captures the main idea of the article, which is Honeywell International's decision to break up into three independently listed companies. The use of bold move adds a sense of drama and intrigue, making it more likely to grab the reader's attention.

Honeywell's Bold Move Breaking Up the Conglomerate

In a move that is sending shockwaves through the industrial sector, Honeywell International has announced its plan to break up into three independently listed companies. This strategic decision comes just months after activist investor Elliott Management took a $5-billion stake in the company.

A Shift in Focus

Honeywell's decision to split is a significant shift in strategy, as it looks to focus on its core strengths in aerospace and automation. The company has been under pressure from investors, including Elliott, to unlock value by spinning off certain divisions. By creating three distinct entities, Honeywell aims to create a more focused portfolio that will drive long-term growth.

Valuation of the Aerospace and Automation Businesses

According to Tony Bancroft, a portfolio manager at Gabelli Funds, the aerospace and automation businesses could be valued at $104 billion and $94 billion, respectively. While some experts are optimistic about the potential gains from the separation, others caution that it may take time for the market to realize the value.

A Trend in the Industrial Sector

Honeywell's decision is part of a broader trend in the industrial sector, where companies are increasingly opting for spin-offs as a way to unlock value. In recent years, 3M, General Electric, and United Technologies have all followed suit, with mixed results. According to RBC Capital Markets data, a group of 12 industrial spin-offs gained around 50% in the year following their separations.

Mixed Performance

While some spin-offs have outperformed the market, others have trailed behind. Invesco's Spin-off ETF, which tracks S&P 500 companies that have spun off from larger corporations, has lagged the market over the last decade. This mixed performance may leave investors wondering what to expect from Honeywell's separation.

A Positive Outlook

Eric Martel, CEO of business jet maker Bombardier, is optimistic about Honeywell's announcement, seeing it as a positive development for the aerospace industry. He believes that having more focus on this division will be beneficial, given its growing importance.

Unlocking Value

Honeywell's decision to split is seen as an effort to unlock value by creating three distinct entities with unique strengths and opportunities. The company has been under pressure from investors to shed non-core assets and focus on its aviation, automation, and energy sectors. With this move, Honeywell aims to create a more focused portfolio that will drive long-term growth.

Conclusion

Honeywell's decision to split into three independently listed companies is a significant development in the industrial sector. While some experts are optimistic about the potential gains from the separation, others caution that it may take time for the market to realize the value. As the company embarks on this new chapter, investors will be watching closely to see how the spin-offs perform and what impact they have on Honeywell's overall strategy.

Key Takeaways

Honeywell is splitting into three independently listed companies.
The move comes just months after activist investor Elliott Management took a $5-billion stake in the company.
The aerospace and automation businesses could be valued at $104 billion and $94 billion, respectively.
Some experts are optimistic about the potential gains from the separation, while others caution that it may take time for the market to realize the value.

Keywords Honeywell, spin-offs, industrial sector, aerospace, automation, advanced materials.

Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.