Honeywell announced plans on Thursday to break itself into three publicly traded companies, dismantling one of the last remaining U.S. industrial conglomerates. The move follows mounting pressure from activist investor Elliott Investment Management, which disclosed a $5 billion stake in the company late last year and urged structural changes to unlock shareholder value.
The company said it will separate its aerospace and automation businesses, in addition to its previously announced spinoff of its advanced materials unit. Honeywell Chairman and CEO Vimal Kapur described the restructuring as a way to streamline operations and improve market focus. "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," Kapur said in a statement.
Shares of Honeywell initially rose on the news but later fell nearly 5% in premarket trading after the company provided a weaker-than-expected sales and profit forecast for 2025. It projected adjusted earnings per share between $10.10 and $10.50, below analysts' estimates of $10.93. Its revenue outlook of $39.6 billion to $40.6 billion also missed Wall Street's expectation of $41.22 billion, according to LSEG data.
The decision to separate the aerospace business follows months of speculation. In December, Honeywell acknowledged it was evaluating the possibility of a spinoff, shortly after Elliott revealed its stake. The hedge fund had been pressing for a split, arguing that Honeywell's stock had underperformed relative to the broader market. While the company's shares had gained 7.7% in 2024 up to November 11, the S&P 500 had risen 26.6% over the same period.
The aerospace unit, which contributed approximately 40% of Honeywell's total revenue in 2024, is the company's most valuable segment, with estimates suggesting it could be worth between $90 billion and $120 billion, including debt. The division supplies aircraft components and services to Boeing, Airbus, and the U.S. government, benefitting from increased demand as airlines extend the life of older planes amid aircraft shortages.
Honeywell's decision reflects a broader trend among industrial giants to simplify their corporate structures. General Electric, 3M, and United Technologies have all undertaken similar breakups in recent years as conglomerates face pressure to boost shareholder returns and compete with more specialized companies. Analysts note that large industrial firms are increasingly seen as inefficient, with investors preferring businesses that can focus more narrowly on specific industries.
The breakup marks a historic shift for Honeywell, a more than 100-year-old company that has long operated across multiple industrial sectors. Despite past activist challenges-including a 2017 push by Third Point's Daniel Loeb to spin off the aerospace business-the company had resisted major structural changes.
Honeywell said it expects to complete the automation and aerospace separations in the second half of 2026, while the spinoff of its advanced materials business remains on track for late 2025 or early 2026. The company stated that the transactions would be tax-free for shareholders.
The breakup follows a period of significant portfolio adjustments under Kapur's leadership. Since taking over as CEO, he has pursued a series of acquisitions and divestitures, including the planned sale of Honeywell's personal protective equipment business. The company has emphasized that separating its businesses will allow each entity to pursue targeted growth strategies while providing investors with greater transparency.
