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Honeywell plans spinoff of noncore assets into two publicly traded companies


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Honeywell plans spinoff of noncore assets into two publicly traded companies

Honeywell International Inc said it is planning to separately spin off its noncore assets into two new publicly traded companies.

The industrial conglomerate said in its comprehensive portfolio review that it will separate its Homes and ADI Global Distribution Business and its Transportation Systems into independent, publicly traded companies by the end of 2018. The combined businesses were worth $7.5 billion.

"The remaining Honeywell portfolio will consist of high-growth businesses in six attractive industrial end markets, each aligned to global mega trends including energy efficiency, infrastructure investment, urbanization and safety," Honeywell said in a statement. As part of the changes, the Smart Energy business unit will immediately be integrated into the Process Solutions unit within Honeywell Performance Materials and Technologies.

The company said it expects its Homes and ADI Global Distribution business to have an annualized revenue of approximately $4.5 billion and lead in the home heating, ventilation and air-conditioning controls and security markets. The Transportation Systems business will specialize in turbocharger technologies for a wide range of engine types across global automobile, truck and other vehicle markets.

The changes run contrary to the calls made by one of its shareholders, activist hedge fund Third Point LLC, to spin off its aerospace division, Reuters said.

Honeywell also projected sales to be $10.1 billion in the third quarter, up 3% reported and up 5% organic. The company projects earnings per share to be $1.75, up 9% reported and up 16% ex-divestitures, normalized for tax at 26%.

Honeywell also announced that Gary Michel, who had been running Ingersoll-Rand Co.'s Residential HVAC and Supply business, will join the company and take over as president and CEO of its Home and Building Technologies group.