Honeywell International Inc. (HON) stock is taking flight on Tuesday, propelled by a surprise announcement from activist investor Elliott Investment Management. Elliott has acquired a significant stake in Honeywell, exceeding $5 billion, and is pushing for a dramatic change: a split of the company into two separate businesses.
In a letter addressed to Honeywell’s board of directors, Elliott argues that Honeywell’s current conglomerate structure, while once effective, has become a hindrance. They believe that separating the company’s Aerospace and Automation divisions would unlock significant value for shareholders.
By operating as independent entities, Elliott suggests that these divisions would benefit from more focused strategies, specialized management, and a more efficient allocation of capital. The activist firm predicts that this separation could lead to a remarkable increase in share price, potentially soaring between 51% and 75% over the next two years.
Elliott emphasizes that while the idea of simplification has been discussed within Honeywell before, the current market environment presents a particularly opportune moment for such a move. They highlight the immense potential value creation that can be achieved by pursuing simplification now, a potential that could be overlooked by sticking to the existing structure.
Elliott envisions both Aerospace and Automation becoming $100 billion giants in their own right, a prospect that has investors excited. They predict a bullish outcome for Honeywell following a potential split, with share prices reaching between $330 and $383 by the end of 2026.
The market is clearly responding to Elliott’s bold move, as Honeywell shares are up over 6% in early trading. This development is being closely watched by analysts and investors alike, as the potential restructuring could significantly reshape the future of the industrial giant.
