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Honeywell CEO: We’re relooking at our businesses

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Honeywell CEO: We're relooking at our businesses

DAVOS, SWITZERLAND – Call it more of a portfolio realignment at iconic industrial giant Honeywell (dear) than a breakup.

“I think the biggest change I’m driving is how we turn it into a growth-oriented company, and part of that is how we transform our portfolio so that it naturally pivots towards end markets, products that are growth-oriented, but also change. our own capabilities in innovation and new product development,” Vimal Kapur told Yahoo Finance at the World Economic Forum in Davos, Switzerland.

kapur He joined Honeywell in 1989, rising through the ranks and assuming the role of CEO in June 2023. He added the additional role of President in June 2024.

Now it is diving headlong into a complete renovation of a company whose roots date back to 1886 in the thermostat sector. Honeywell has also developed through decades of acquisitions, starting with 1999 merger with Allied Signal.

At a time when industrial conglomerates with economies of scale are no longer rewarded with lofty valuations, Kapur said in October 2024 that Honeywell spin off its advanced materials business. The new public company is scheduled to begin trading in late 2025 or early 2026. It has annual revenues of about $3.8 billion.

Apparently, that move and over-promising wasn’t good enough for the activist community.

Honeywell reportedly plans to split into two separate, publicly traded entities. One business would house Honeywell’s automation division and the other its aerospace business. No formal announcement has been made. This follows Honeywell saying in december would explore spinning off its aerospace business.

“This is under review with the board, and during our (upcoming) earnings call, we have promised that we will provide an update on this,” Kapur said.

The company reports its results on February 6.

Honeywell is under pressure from feared activist investor Elliott Management, which has a stake worth about $5 billion. The firm revealed its investment in November.

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The company’s shares have risen 8% since the end of October. But Elliott may view the stock as lagging the market, with overlapping businesses. Honeywell shares have risen 75% over the past five years, compared with a 144% gain for the S&P 500.

Stephen Tusa, an industrial analyst at JPMorgan, estimates that Honeywell could be worth $330 a share if it were split up. The stock is currently trading at about $223.

“This is a board that we believe has and will continue to fairly evaluate all value creation options and act accordingly to enable the activist plan to move forward,” Tusa said.

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