Honeywell Plans To Separate Automation and Aerospace, Creating Three Companies

In a press release issued by Honeywell yesterday, the company, announced that it will split into three separate businesses. This story has been developing for several months since activist investor Elliott Investment Management disclosed its stake of over $5 billion in the conglomerate. Even before discussions of a potential breakup, Honeywell, under Vimal Kapur's leadership, had already been refining its business focus. Honeywell announced the sale of its personal protective equipment business in 2024, for example, as well as plans to spin off the advanced materials business. The automation business also acquired the $5 billion security system business of Carrier last year, adding to its considerable strength in the building automation sector. In ARC's view, the proposed breakup will provide more focus for Honeywell's automation business, which continues to perform quite well, and Honeywell remains a leader in the markets for process automation systems, process safety systems, advanced automation software, services, and more.

The conglomerate business model championed by business leaders of the past such as Jack Welch is now coming under fire of late from investors like Elliott, who believe that companies can perform better as separate, focused businesses. From a business standpoint, this breakup could provide even more opportunities for a newly focused automation business. From a technology standpoint, there have been successes in sharing certain technical knowledge between business segments, such as borrowing concepts in interface design from the avionics sector and applying the same visualization principles to the process automation HMI and alarm management businesses within Honeywell. In ARC's opinion, however, much of the technology leadership coming from Honeywell has been from the automation business, which has considerable industrial software development capabilities resulting in applications like the versatile multi-discipline Honeywell Forge IoT data platform. The automation business is the real jewel in the Honeywell crown. for more details on the deal, please read my colleague Chantal Polsonetti's blog here.