The American technology and manufacturing behemoth Honeywell announced plans to spin off two of its departments. The businesses in question are automotive-turbochargers and household-systems. On the other hand, the parent company is going to hold fast to the aerospace technology operations, even though its shareholders disagreed with this approach. However, investors will receive stocks in the two publicly traded companies.
The Future Publicly Traded Companies Will Be in Charge of Transportation and Household Systems
Investor Daniel S. Loeb has put Honeywell under a lot of pressure. His voice is an influential one considering that he is the head of the hedge fund Third Point. Therefore, the American organization couldn’t have ignored his solicitation for a spinoff of the aerospace department.
As a result, Honeywell pursued a number of reviews with the goal to streamline its business. However, the company went against Loeb’s proposal in its decision to retain the exact unit Loeb wanted gone. On the other hand, there are still going to be not one, but two spinoffs by the end of 2018.
The units that are going to become publicly traded companies are the homes and global distribution plus transportation systems businesses. They contribute annually with a total revenue of $4.5 billion and $3 billion respectively.
The president and chief executive of the company, Darius Adamczyk, stated that these two internal changes are going to act to the benefit of shareholders. Therefore, even though Honeywell didn’t accurately carry out the specific recommendations, investors are still supporting this new direction, including hedge fund Third Point.
“We are pleased that the board and management chose to conduct a thorough portfolio review and agreed that Honeywell should narrow its business focus.”
Honeywell Will Consider Further Capital Development Strategies
Gary S. Michel, who used to work for Ingersoll Rand, is going to lead the homes business as a standalone company. This division will handle different projects such as ventilation, air-conditioning, and heating. It will also distribute fire and security protection assets. On the other hand, the transportation unit will develop technologies for vehicles.
There might be further spinoffs to streamline the core businesses at Honeywell. Adamczyk claimed that the board would also consider opening a mergers and acquisitions program.
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