Elliott Investment Management Pushes For Honeywell Break-up, Citing $5 Billion Stake

Elliott Investment Management, one of the most influential activist investors, has called for Honeywell International to break up its business into two separate entities on Tuesday. 

The firm, which has built a $5 billion stake in the industrial giant, argues that such a separation would unlock greater value for shareholders and help Honeywell perform better.

In a letter to Honeywell’s board, Elliott emphasised that the company’s current structure is holding it back. “Honeywell is an iconic pillar in American industry with market-leading assets, but uneven execution, inconsistent financial results, and an underperforming share price have hurt it over the last five years,” the letter stated. 

Elliott, which manages roughly $70 billion in assets, suggested that by splitting Honeywell into two standalone businesses—its aerospace and automation units—the company could boost its share price by 51% to 75% over the next two years.

Following the announcement, Honeywell’s stock surged nearly 5%, reaching $235.72 per share in early trading, and has gained almost 13% since the start of the year.

Elliott’s proposal marks the firm’s largest-ever investment and reflects its growing influence in corporate strategy. “We believe a separation could create two sector leaders that could perform better and benefit customers, employees, and shareholders,” the firm stated. 

It added that it hoped to work collaboratively with Honeywell’s management, requesting a meeting to discuss the proposal. 

Honeywell, valued at $153 billion, responded to the activist investor’s call, expressing its openness to engage in dialogue. “We look forward to engaging with Elliott,” said the company, which was unaware of Elliott’s investment prior to the letter.

CEO Vimal Kapur, who took the helm of Honeywell in 2023, has already made strides in reshaping the company. Under his leadership, Honeywell has focused on high-growth sectors such as automation, aviation, and energy transition, while shedding non-core assets. 

Last month, the company announced plans to spin off its advanced materials unit into a publicly traded company and is also exploring the sale of its personal protective equipment division.

Elliott, however, believes that a more dramatic move—a breakup of the company—would be more beneficial. It asserts that after separating its aerospace business, Honeywell’s automation division could emerge as a stronger, better-run company with a valuation of around $100 billion. 

“History has shown that companies like United Technologies, GE, and Ingersoll Rand have reaped significant rewards from similar separations,” Elliott noted in its letter. 

The activist investor surveyed shareholders, revealing that 81% of them believe pure-play industrial companies perform better than diversified conglomerates.

As one of the most powerful players in the activist investing space, Elliott has recently pushed for significant changes at other major corporations, including Southwest Airlines and Starbucks. The firm’s bold proposal to break up Honeywell signals its continued influence in reshaping corporate America’s biggest companies.

Honeywell, meanwhile, is poised to engage with Elliott as it weighs the next steps in its ongoing transformation.

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