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On Thursday, Honeywell announced its decision to divide into three independently listed companies, marking the dissolution of one of the last remaining conglomerates in the United States. This announcement comes just months after activist investor Elliott Management acquired a $5 billion stake in the industrial powerhouse.
Despite this significant corporate restructuring, Honeywell’s shares experienced a decline of nearly 5 percent in premarket trading, reversing earlier gains following the company’s somber projections for sales and profits in 2025. The firm indicated that it will segregate its aerospace and automation divisions into distinct entities, in addition to the previously disclosed spin-off of its advanced materials segment. Under the leadership of CEO Vimal Kapur, the industrial and aerospace leader has actively pursued a strategy of divesting non-core assets, concentrating on the aviation, automation, and energy sectors
Elliott Management became interested in Honeywell due to the company’s stock performance lagging behind the market. As of November 11, 2024, the day prior to Elliott revealing its stake, Honeywell’s shares had increased by 7.7 percent, while the overall market had experienced a rise of 26.6 percent during the same timeframe.
Analysts had previously projected that Honeywell’s aerospace division, known for its high profit margins, could be valued between $90 billion and $120 billion, inclusive of debt.
Amid a shortage of new aircraft, the airline sector has been compelled to operate older, more maintenance-heavy planes during a surge in travel, thereby enhancing sales for companies like Honeywell that offer aftermarket services and components. The aerospace segment is Honeywell’s largest source of revenue, contributing approximately 40 percent of the company’s total revenue in 2024, with Boeing and Airbus among its key clients. Additionally, Honeywell holds contracts with the U.S. government, supplying communication and navigation systems, among other offerings.
In October, Honeywell announced its intention to spin off its advanced materials division into a publicly traded entity. Following Elliott’s advocacy, the company indicated in December that it was contemplating a spinoff of its aerospace division.
Honeywell plans to finalize this separation in the latter half of 2026, which will be tax-free for its shareholders.
Elliott’s initiative marks yet another instance of activist pressure on Honeywell to consider a corporate breakup. In 2017, the company successfully resisted calls from Daniel Loeb’s Third Point, which advocated for the separation of its aerospace division.
Honeywell’s current stance further reduces the number of prominent industrial conglomerates in the nation, following similar decisions in recent years by 3M, General Electric, and United Technologies to divest significant segments of their businesses.
The industrial powerhouse has been actively refining its portfolio through various divestitures and acquisitions; however, a substantial breakup would represent a first for the company, which has been in operation for over a century.
Additionally, Honeywell has projected an adjusted profit per share ranging from $10.10 to $10.50 for 2025, which is below the analysts’ average forecast of $10.93, as per data from LSEG.
The company’s sales projections for the year, estimated between $39.6 billion and $40.6 billion, also fall short of Wall Street’s expectations of $41.22 billion.
