Honeywell (NASDAQ: HON) is a $130 billion market cap industrial Goliath. It operates businesses that span from automation to aerospace to advanced materials. The company is an icon on Wall Street today, but in a little over a year the situation is likely to be vastly different. Here’s what you need to know if you’re looking at Honeywell right now.
Although correctly classified as an industrial company, Honeywell is really best thought of as an industrial conglomerate. That basically means the company operates in a number of different businesses, each with its own nuances. This isn’t an uncommon practice, but there’s a pendulum on Wall Street. Sometimes investors want to see companies grow larger through acquisitions, effectively creating conglomerates. And at other times investors want companies to slim down and specialize, which for existing conglomerates means breaking themselves apart.
Wall Street has recently been leaning toward the preference of breaking conglomerates up. Industrial peer General Electric recently completed the process, separating out into three different businesses: GE Aerospace, GE Vernova, and GE Healthcare Technologies. And now Honeywell appears to be ready to do the same, announcing its breakup plans in early February.
Honeywell had previously announced plans to spin off its advanced material business. But it updated the plan to include the separation of its aerospace operations and its automation business. So, like General Electric, Honeywell as it exists today will cease to exist and it will, instead, be three different companies. The goal is to complete the breakup sometime in the second half of 2026, a bit more than a year from now.
So the question for investors who own Honeywell today, or who buy it between now and the time of the breakup, is: What will they own after all of the technicalities are taken care of?
For starters, the process of breaking a giant company up isn’t easy. So the technicalities are a big deal, and they need to be monitored. For example: Who’s going to be on the different boards? Who will end leading the new companies? What will each company’s balance sheet look like?
Sometimes breakups don’t end up happening as planned. They can take longer than expected, and the companies that come out the other side aren’t treated equally well in the breakup. That said, when it all shakes out, shareholders of Honeywell as it exists today will end up owning three different companies.
Honeywell Automation will own the company’s portfolio of productivity-enhancing technologies, solutions, and software. The group had revenue of $18 billion in 2024, so it’s a sizable business. Automation is likely to be an important drive for companies in the future as they look to contain costs and increase profits.
