Bigger isn’t better as Honeywell splits into three

Honeywell is to split into three parts under pressure from activist shareholders. This comes as the company posted results for 2024 up 5% to $38.5bn.

As previously suggested, the company will separate out the automation and avionics business as long as the materials operation into publicly listed companies by the end of 2026. This follows the spin out of the quantum hardware business into Quantinuum in 2021 and the Resideo smart home business in 2018. It will continue with targeted acquisitions during 2025.

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Honeywell Automation will be an $18bn pure play global automation company with a vast installed base across the Internet of Things (IoT) while Honeywell Aerospace will be a $15bn  technology and systems provider for avionics systems.

Advanced Materials, previously announced to be spun out, will be a $4bn provider of sustainability-focused specialty chemicals such as the low carbon footprint Solstice hydrofluoro-olefin (HFO) refrigerant.

The 2024 results showed sales up 5% to $38.5bn. For 2025, the company expects sales of $39.6 billion to $40.6 billion with sales growth in the range of 2% to 5% before the split.

“The formation of three independent, industry-leading companies builds on the powerful foundation we have created, positioning each to pursue tailored growth strategies, and unlock significant value for shareholders and customers,” said Vimal Kapur, Chairman and CEO of Honeywell. “Our simplification of Honeywell has rapidly advanced over the past year, and we will continue to shape our portfolio to create further shareholder value. We have a rich pipeline of strategic bolt-on acquisition targets, and we plan to continue deploying capital to further enhance each business as we prepare them to become leading, independent public companies.”

“Building on decades of innovation as its heritage, Honeywell Automation will create the buildings and industrial infrastructure of the future, leveraging process technology, software, and AI-enabled, autonomous solutions to drive the next generation of productivity, sustainability and safety for our customers,” Kapur added. “As a standalone company with a simplified operating structure and enhanced focus, Honeywell Automation will be better able to capitalize on the global megatrends underpinning its business, from energy security and sustainability to digitalization and artificial intelligence.”

“As Aerospace prepares for unprecedented demand in the years ahead across both commercial and defence markets, now is the right time for the business to begin its own journey as a standalone, public company,” added Kapur. “This next step will further enable the business to continue to lead the future of aviation.”

“With today’s action, Honeywell will be separating its Automation and Aerospace businesses into two market-leading enterprises poised for sustained growth and value creation,” said Elliott Partner Marc Steinberg and Managing Partner Jesse Cohn. “The enhanced focus, alignment, and strategic agility enabled by this separation will allow Honeywell to realize the opportunity for operational improvement and valuation upside. We look forward to continuing to support Vimal and the management team as they execute on the separation and deliver significant long-term value to Honeywell’s shareholders.”