Honeywell Seeks To Simplify Structure, Boost Flexibility With $10B Spin-Off Of Advanced Materials Unit

On Tuesday, diversified manufacturing and technology company Honeywell International HON announced its plan to spin off its Advanced Materials business into an independent, U.S. publicly traded company. The Wall Street Journal first reported the tax-free separation.

“Through the powerful combination of strategic bolt-on acquisitions and subtractions of high quality but non-core business lines, we continue to enhance our portfolio mix and further tighten Honeywell’s alignment to three compelling megatrends: automation, the future of aviation, and energy transition…,” said Vimal Kapur, Chairman and CEO of Honeywell.

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By simplifying the company’s structure, Kapur aims to increase the focus and flexibility of Honeywell’s growth initiatives.

The Wall Street Journal report highlighted the deal is expected to position the business as a separately traded public company with a potential value exceeding $10 billion.

The advanced materials business manufactures polymers, performance fluids, and additives. In 2024, it generated approximately $3.8 billion in revenue with an EBITDA margin greater than 25%.

The Wall Street Journal highlighted that the business unit’s sales accounted for around 10% of Honeywell’s overall revenue.

As part of Kapur’s efforts to rejuvenate the company, Honeywell has been active on the acquisition front, including Carrier Global Corporation’s CARR Global Access Solutions business for $4.95 billion in an all-cash transaction, CAES Systems from Advent International for about $1.9 billion, and Air Products And Chemicals, Inc.’s APD liquefied natural gas process technology and equipment business for $1.81 billion.

The decision to spin off the advanced materials segment is seen as a strategic move to provide Honeywell and the new entity with enhanced financial flexibility.

Honeywell targets a tax-free spin-off to shareowners to be completed by the end of 2025 or early 2026.

It follows a broader trend among industrial conglomerates to simplify operations in response to investor demands for clearer business models.

Honeywell recently increased its annual cash dividend from $4.32 to $4.52 per share.

The increase would apply to the fourth-quarter dividend of $1.13 per share, payable on December 6, 2024, to holders of record as of the close of business on November 15.

Price Action: At last check Tuesday, HON stock was up 1.76% at $206.90 during the premarket session.

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