Honeywell approves aerospace spin-off, distribution set for June 29

Honeywell International's board approved the spin-off of its aerospace business, with shares to be distributed June 29.

The separation, announced Monday, creates two publicly traded companies. Honeywell Aerospace will operate as an independent tier-1 aerospace and defense supplier of mission-critical systems and technologies, including avionics, engines, and navigation systems for commercial and military aircraft. The remaining entity, Honeywell Technologies, will focus on the industrial world's transition from automation to autonomy, encompassing the company's building automation, industrial process solutions, and safety and productivity businesses.

Honeywell reaffirmed its full-year 2026 guidance, projecting sales of US$38.8 billion to US$39.8 billion. The company also announced a 1-for-2 reverse stock split, with when-issued trading expected to begin ahead of the June 29 distribution date. Honeywell, which trades on the Nasdaq under the ticker HON, reported US$38.5 billion in revenue in fiscal 2025.

The spin-off follows pressure from activist investor Elliott Investment Management, which publicly called for a breakup of the industrial conglomerate. Honeywell CEO Vimal Kapur had been weighing structural options since receiving the activist's letter, which argued the conglomerate structure was masking the value of individual business units. The move mirrors similar breakups across the industrial sector, including General Electric's separation into three companies and Johnson Controls' divestiture of its air distribution business.

The aerospace business is Honeywell's largest segment, supplying engines, cockpit systems, and connectivity solutions to planemakers including Boeing and Airbus. As a standalone company, Honeywell Aerospace will compete directly with RTX Corp., GE Aerospace, and Safran in the commercial aftermarket and defense contracting markets. The unit benefits from a multiyear backlog driven by aircraft production ramp-ups and rising defense budgets in the US and Europe.

The separation is expected to unlock shareholder value by allowing each business to trade at its own valuation multiple. Honeywell Aerospace, with its defense exposure, could command a higher multiple as a pure-play supplier, while Honeywell Technologies can pursue growth in industrial automation without being overshadowed by the larger aerospace segment. The aerospace business accounted for roughly 40 percent of Honeywell's total revenue in fiscal 2025. Competitors such as RTX Corp. and GE Aerospace trade at higher earnings multiples than Honeywell's current blended valuation, a gap that highlights the potential upside from the split. The 1-for-2 reverse split will reduce Honeywell's outstanding share count ahead of the separation, a common step to adjust the stock price for post-spin-off trading. Investors will watch the June 29 distribution date for when-issued trading activity and post-separation price discovery.

This article is for informational purposes only and does not constitute investment advice.