Honeywell Plans to Spin Off Advanced Materials Business
Move is part of CEO’s plan to simplify the business around three core segments
The details
The business could be worth more than $10 billion as a separately traded public company, some of the people said. The tax-free separation could be announced Tuesday.
The rationale
The move would support Honeywell Chief Executive Vimal Kapur’s plan to simplify the company’s business around its three core segments of aviation, automation and the energy transition.
Charlotte, N.C.-based Honeywell has a market value of more than $130 billion, with its shares down about 3% so far this year. That compares with the S&P 500’s rise of 19% over the same period.
The materials business is on track to notch revenue in 2024 of roughly $3.8 billion, or about 10% of Honeywell’s overall revenue.
It makes everything from polymers to performance fluids to additives used in industrial paints, plastics and asphalt, and includes its well-known Solstice brand, according to the company’s website.
The context
The separation comes as the industrials conglomerate has been on an acquisition spree in recent months, announcing many smaller, so-called bolt-on deals that build on a fresh strategy laid out by management roughly one year ago.
Kapur, a longtime Honeywell executive, took over the CEO role from Darius Adamczyk in June 2023.
Last December, Honeywell struck a roughly $5 billion deal to buy Carrier Global’s security business. That was followed by a $2 billion deal for aerospace-and-defense technology company CAES Systems, and a $1.8 billion acquisition of the liquefied natural-gas process technology and equipment business from Air Products.
By separating its advanced materials arm, Honeywell hopes that both it and the remaining company will have greater financial flexibility for dealmaking and other opportunities, the people familiar with the matter said.
Companies across industries have been streamlining their operations as investors demand clearly defined businesses that make stocks easier to value. Storied conglomerates including DowDuPont and General Electric have completed spinoffs or breakups in recent years.