Investing.com -- Honeywell International Inc (NASDAQ:HON)., the Charlotte, North Carolina-based industrial conglomerate, is reportedly planning a breakup into two independent publicly traded companies, following pressure from Elliott Investment Management, according to a report from Bloomberg, citing people familiar with the matter. The move will result in one company focusing on automation and the other on aerospace and defense.
This decision is yet to be formally announced, but insiders suggest that the plans could be disclosed along with the company’s fourth-quarter earnings, which are due for release in early February. However, the final details of the split still need approval from the company’s board.
Over the past 12 months, Honeywell’s shares have climbed more than 11%, bringing the company’s market value to approximately $143 billion. Despite this growth, the stock has lagged behind the broader S&P 500, which has seen a rise of more than 20% over the same period.
In December, Honeywell revealed that it was considering a separation of its aerospace business as part of a wider review of its operations. It also stated that an update on this matter would be provided with its fourth-quarter earnings. This announcement followed a report from a month earlier that Elliott had established a position in Honeywell exceeding $5 billion, marking its largest ever stake in a single stock, and was advocating for the company to consider a breakup.
Under the leadership of CEO Vimal Kapur, Honeywell has already been making moves to restructure its portfolio and streamline its holdings. In October, the company unveiled plans to spin off its advanced materials division.
Analysts suggest that a larger breakup could yield significant benefits. A report from Barclays (LON:BARC) Plc last month estimated a sum-of-the-parts valuation of about $270 per share for Honeywell’s assets, based on free cash flow expectations. This figure significantly exceeds the company’s closing price of $218.19 on January 10. In a separate note, Jefferies Financial Group Inc. analyst Sheila Kahyaoglu stated that the aerospace business alone could be worth over $90 billion.
However, Honeywell’s deliberations are ongoing, and the details and timing of the separation may still change. Representatives for both Honeywell and Elliott declined to comment beyond the company’s December statement.
The trend of large industrial conglomerates pursuing breakups is not new. General Electric (NYSE:GE) Co., for instance, divided itself into three parts by spinning off its healthcare business in 2023 and its energy arm last year. Similarly, in 2017, Dan Loeb’s Third Point LLC acquired a stake in Honeywell and called for the company to spin off its aerospace division.
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