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Honeywell International Inc. has unveiled plans to separate its automation and aerospace divisions, a move that complements its earlier decision to spin off its Advanced Materials unit. This restructuring aims to establish three publicly traded entities, each with focused strategies tailored to distinct markets.
Headquartered in Charlotte, North Carolina, Honeywell anticipates finalizing these separations by the latter half of 2026, with the Advanced Materials spin-off expected to conclude by late 2025 or early 2026.
Vimal Kapur, Honeywell’s chairman and CEO, remarked, “The creation of three independent, leading firms builds upon our strong foundation, enabling each to pursue targeted growth strategies and generate substantial value for both shareholders and customers.”
He further noted, “Our ongoing efforts to streamline Honeywell’s operations have progressed significantly over the past year, and we will continue to refine our portfolio to maximize shareholder value. We are actively identifying strategic acquisition targets and plan to invest further in each business in preparation for their independent public market presence.”
The company has outlined numerous advantages of this separation, emphasizing that each new entity will benefit from a more straightforward strategic focus and enhanced financial flexibility. This, in turn, will allow for organic growth investments that align with individual business cycles. By tailoring capital allocation to meet their specific strategic goals, the newly formed companies aim to boost their potential for growth.
Moreover, the spin-offs are expected to have more concentrated boards of directors and management teams, bringing in specialized expertise. Honeywell believes this restructuring will allow each new company to better capitalize on unique investment opportunities and enhance long-term value for stakeholders.
Insights into Automation, Aerospace, and Advanced Materials Divisions
Once finalized, Honeywell Automation will shift its focus from traditional automation to advanced autonomy solutions. The division aims to enhance productivity by providing innovative hardware and software solutions for sectors like manufacturing and logistics.
Projected to generate revenue of $18 billion in 2024, Honeywell Automation plans to harness its resources to facilitate comprehensive digital transformations across various industries. This evolution will build upon Honeywell’s considerable technological leadership and experience, as well as its extensive customer base.
In parallel, Honeywell Aerospace, already a significant player in the global market, boasts technology utilized across nearly all commercial and defense aircraft platforms internationally. With an expected annual revenue of $15 billion in 2024, it will emerge as a major publicly traded aerospace supplier, offering products such as propulsion systems, cockpit interfaces, and auxiliary power systems.
Meanwhile, the Advanced Materials division is set to focus on sustainability, offering specialty chemical solutions and materials. This branch emphasizes fluorine products and electronic materials, contributing nearly $4 billion in revenue last year. Its innovations, like the Solstice hydrofluoro-olefin technology, aim to mitigate impacts on global warming.
Honeywell’s Commitment to Growth and Portfolio Simplification
Sparking organic growth while simplifying its portfolio has been a priority for Honeywell since late 2023. The company has executed strategic acquisitions totaling around $9 billion, including the purchase of the Access Solutions unit from Carrier Global, Civitanavi Systems, CAES Systems, and the LNG business from Air Products.
The firm also plans to divest its Personal Protective Equipment business, with the sale anticipated to close in the first half of 2025. Honeywell aims to execute this split in a manner that maintains a tax-neutral position for its shareholders.
With the ongoing spin-off of Advanced Materials on track for completion by late 2025 or early 2026, Honeywell asserts that each of the three new companies will be adequately capitalized, maintaining a strong financial standing to pursue future opportunities. Both Honeywell Automation and Honeywell Aerospace are expected to uphold solid investment-grade credit ratings following the restructuring.
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