Honeywell, one of the last remaining U.S. industrial conglomerates, announced plans to split into three independent companies, following the path of General Electric and Alcoa. The move aims to create more agile businesses by separating its automation, aerospace, and advanced materials divisions.
Why Honeywell Is Breaking Up
The decision comes after Elliott Investment Management revealed a $5 billion stake in Honeywell and pushed for structural changes. CEO Vimal Kapur said the split will help each company “pursue tailored growth strategies and unlock significant value for shareholders and customers.”
The company has been streamlining operations since Kapur took over as CEO, selling its personal protective equipment business and making targeted acquisitions.
Timeline for the Breakup
Honeywell’s split will happen in phases:
- Advanced Materials: Spinoff expected by the end of 2024 or early 2025.
- Automation & Aerospace: Full separation anticipated in the second half of 2026.
Investor Pressure to Simplify Conglomerates
Large U.S. conglomerates have been under pressure from investors to simplify their structures, allowing each business to operate with greater independence. The trend gained momentum after GE announced its breakup in 2021 into separate aviation, healthcare, and energy companies.
Once considered the pinnacle of corporate power, industrial giants like Honeywell are now facing competition from smaller, specialized firms that operate with clearer goals and greater flexibility.
Market Reaction and Future Outlook
Honeywell’s stock fell nearly 3% in premarket trading following the announcement, reflecting investor uncertainty about the restructuring.
While the move is designed to enhance growth, success will depend on how effectively each independent company adapts to its market. For now, Honeywell’s breakup signals the continued decline of the traditional conglomerate model in favor of more focused and agile businesses.
