Honeywell International is exploring the possibility of separating its aerospace business as part of a strategic review, following pressure from activist investor Elliott Investment Management to break up the company.

The industry conglomerate said Monday it would provide an update on the review in its fourth-quarter earnings report in January.

Honeywell’s aerospace division, which manufactures aircraft engines, avionics and related systems, is the company’s largest source of revenue, with revenue of US$11.47 billion in the first nine months of 2024, contributing to the company’s total sales. This accounted for approximately 40% of the total. The division supplies Boeing, Airbus and other major aircraft manufacturers and has benefited from increased aircraft production despite supply chain issues.

Analysts estimate that Honeywell’s aerospace division could be worth between $90 billion and $120 billion as a standalone business.

About the company

Honeywell operates across multiple sectors, including aerospace, automation, healthcare, building technology, and energy solutions. The company designs and manufactures a wide range of products, from aircraft engines and avionics to building control systems, safety equipment and industrial automation technology.

Honeywell is also involved in quantum computing through a majority stake in Quantinuum.

Our headquarters are located in Charlotte, North Carolina.

review

The review revealed that Elliott in October revealed a US$5 billion stake in Honeywell – the largest ever investment in a single stock – giving the company a focus on aerospace and automation. This was done after prompting the company to split into two separate businesses.

Elliott claimed the separation could boost the company’s stock price by 75%.

Under CEO Bimal Kapur, who takes over as CEO in 2023, Honeywell has already made acquisitions aimed at increasing its focus on aerospace, energy transition, and building and factory automation systems. The company is making several strategic moves, including a sale.

Mr. Kapur described the company’s strategy as one of “important transformational options,” and said Honeywell was evaluating its options with “a detailed review of feasibility and timing.”

Honeywell’s announcement garnered support from Elliott. “The portfolio transformation being led by Vimal and his team points in the right direction for Honeywell,” Elliott said in a statement.

reaction

Barclays analyst Julian Mitchell interpreted the promise to update the market in January as an indication that a bigger split is likely. “Honeywell has clearly signaled its intention to consider larger strategic moves,” he said in a research note.

If Honeywell moves forward with a spinoff of its aerospace business, it would follow a broader trend among large U.S. conglomerates to simplify their business structures. Companies like General Electric and Dow Chemical have spun off core divisions in recent years to improve profitability and streamline operations.

Honeywell stock is currently up 4.33% to $237.48. The company’s stock price has increased 13.6% since the beginning of the year (though it has lagged the S&P 500’s rise of 28.3%).