Elliott Management has revealed a massive £5bn stake in Honeywell International, marking its largest-ever investment whilst pushing for a significant break-up of the £164bn industrial conglomerate.
The activist investor’s bold move targets the separation of Honeywell into two distinct entities: the aerospace division, specialising in aircraft equipment, and the automation segment, which provides warehouse and plant tooling solutions.
This strategic position by Elliott builds upon their growing portfolio of concentrated investments, having already committed £2.5bn to Texas Instruments and £2bn to Southwest Airlines this year, drawing from their substantial £69bn asset pool.
Honeywell’s chief executive, Vimal Kapur, who has orchestrated £9bn in acquisitions since taking the helm last year, has simultaneously moved to divest the Advanced Materials unit, one of the company’s largest divisions. The organisation maintains its focus on what it terms “three compelling megatrends”: automation, aviation’s future, and energy transition.
Industry analysts view Honeywell as the final remaining industrial conglomerate yet to undergo restructuring, following similar strategic splits by competitors like GE and 3M. Julian Mitchell, an equity analyst at Barclays, notes that independent businesses benefit from focused management teams and boards, making it simpler for investors to track trends and make investment decisions.
The market responded positively to Elliott’s investment announcement, with Honeywell’s shares climbing 4 per cent. However, the stock’s performance has lagged behind the broader market, showing only a 12 per cent increase this year compared to the S&P 500’s 26 per cent rise.
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