Honeywell spins off A$9.6b units

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US manufacturer Honeywell will spin off its homes product portfolio and ADI global distribution business as well as its Transportation Systems business into two stand-alone, publicly-traded companies.

The planned separation transactions are intended to be tax-free spins to Honeywell share-owners for US federal income tax purposes and are expected to be completed by the end of 2018.

“As part of that review, we analysed numerous criteria, including growth outlook, financial performance, market dynamics, potential for disruption, and, most importantly, assessment of fit as a Honeywell business,” said Honeywell president and CEO Darius Adamczyk.

“The remaining Honeywell portfolio will consist of high-growth businesses in six attractive industrial end markets, each aligned to global mega trends including energy efficiency, infrastructure investment, urbanisation and safety.

“These businesses are best positioned to leverage Honeywell synergies from our technologies, financial and business models, and talent. Our simplified portfolio will offer multiple platforms for organic growth and margin expansion through further deployment of our world-class HOS Gold operating system and the Honeywell Sentience Platform.”

Honeywell will also have multiple levers for continuing to execute an aggressive capital deployment strategy, including a vigorous and disciplined M&A program.

“The spun businesses will be better positioned to maximise share-owner value through focused strategic decision making and capital allocation tailored for their end markets,” Adamczyk said.

“At Honeywell, we will continue our track record of execution, delivering growth, margin expansion, and aggressive capital allocation for our share-owners.”

The new Homes and Global Distribution business will be a leader in the home heating, ventilation and air conditioning (HVAC) controls and security markets, and a leading global distributor of security and fire protection products.

The business is expected to have annualised revenue of approximately US$4.5 billion (A$5.8), a high-yield credit rating, approximately 13,000 employees, and financial responsibility for certain Honeywell legacy liabilities.

The new Transportation Systems business will be a global leader in turbocharger technologies with best-in-class engineering capabilities for a broad range of engine types across global automobile, truck and other vehicle markets.

The business is expected to have annualised revenue of approximately US$3 billion (A$3.85b), a high-yield credit rating, approximately 6,500 employees and financial responsibility for Honeywell legacy automotive segment liabilities in an amount equal to our Bendix legacy asbestos liability.