Honeywell, one of the last major industrial conglomerates in the US, has announced it will divide into three separate companies. This transformation will begin with spinning off its Advanced Materials segment in late 2025 or early 2026. Following this, Honeywell Automation will separate from Honeywell Aerospace in the latter half of 2026. This move parallels General Electric’s 2021 restructuring, where the company split into aerospace, energy, and healthcare divisions. In recent years, other industrial giants like 3M and Johnson Controls implemented similar strategies.
The rationale behind the division is clear. Shareholders anticipate a tax-free split of the automation and aerospace segments, offering each unit increased strategic focus and financial flexibility. By separating operations, they hope for a favorable stock market response, as seen with their industry counterparts.
Honeywell has been active in acquisitions, investing $9 billion since 2023. The firm acquired various businesses, including Carrier Global’s access solutions segment for $4.95 billion. Other acquisitions include Civitanavi Systems for €200 million, CAES Systems for $1.9 billion, and liquefied natural gas technology from Air Products for $1.81 billion. Meanwhile, it plans to divest its personal protective equipment business by mid-2025 for $1.325 billion. The firm currently boasts a market valuation of $138 billion.
The strategy will allow each new business unit to thrive independently. For example, Honeywell Automation will focus on Industry 4.0/5.0 solutions, leading the industrial sector’s shift from automation to autonomy. With $18 billion in 2024 revenues, the unit will drive productivity, sustainability, and safety using AI-enabled solutions.
Honeywell Aerospace aims to become a major public aerospace supplier with $15 billion in 2024 revenue. Its clientele includes giants like Airbus and Boeing. Meanwhile, the Advanced Materials division will focus on sustainability with specialty chemical and materials solutions.
Vimal Kapur, Honeywell’s CEO, emphasized the significance of this move, stating: “Our simplification of Honeywell has rapidly advanced over the past year, and we will continue to shape our portfolio to create further shareholder value.”
The division has also received support from investor firm Elliott Management, which holds a $5 billion stake. They believe the division enhances focus and strategic agility, leading to improved operations and potential increase in company valuation.