Honeywell stakeholder Elliott Management, with a $5 billion investment, seeks to split the company.

• Honeywell is being urged by activist investor Elliott Management to split into two separate businesses, with a stake worth over $5 billion.
• If Honeywell separates its Aerospace and Automation businesses, Elliott predicts that shareholders could experience a 75% increase in value within two years.
• The activist investor stopped short of overtly criticizing CEO Vimal Kapur.

Elliott Management, an activist investor, holds a $5 billion-plus stake in and is pushing the industrial conglomerate to split into two separate companies.

According to Elliott, Honeywell should split into two separate businesses: Aerospace, which provides engines and avionics to both the military and commercial customers, and Automation, which offers sensors and control systems to industrial users.

Honeywell's conglomerate structure is no longer suitable, according to Elliott, managing partner Jesse Cohn, and partner Marc Steinberg, who wrote in a Monday letter. Elliott believes that dividing Honeywell into two companies could potentially unlock upside of as much as 75% over the next two years.

In 2023, Vimal Kapur became the CEO of Honeywell. Despite the decline in M&A activity in 2024, he continued to acquire billions of dollars' worth of businesses.

Since 2019, Honeywell has underperformed its industrial peers, according to Cohn and Steinberg. They attribute this directly to a messy corporate structure, a challenged portfolio, and shoddy investor messaging.

The two noted that Honeywell was home to a "collection of best-in-class businesses," with its Aerospace business being the "crown jewel." However, Elliott pointed out that Honeywell's best days were under former CEO David Cote, and while the activist investor stopped short of criticizing Kapur, it said Honeywell had "struggled" to meet basic expectations around performance in recent years.

Elliott suggested that the "direct approach" to resolving Honeywell's difficulties would involve separating the company.

Elliott's recommendation mirrors a broader trend among industrial businesses. General Electric, often viewed as the epitome of conglomerates, recently completed a plan first announced in 2018 to split its empire into three parts. Similarly, other conglomerates such as 3M and Johnson Controls have also divested or spun off their businesses.

Elliott has made a similar request at Honeywell before. In recent years, the company has pursued asset sales or breakups, including a 2019 push at Marathon Petroleum. Other companies targeted by Elliott have also pursued similar actions. Previously, Elliott ran multiple campaigns at Alcoa to break up the company.

The Honeywell spokesperson stated that the company and its board value the opinions of all its shareholders.