Honeywell to Spin Off Homes Portfolio, ADI Global in 2018

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Honeywell President and CEO, Darius Adamczyk
Honeywell President and CEO, Darius Adamczyk

HONEYWELL has reported that it intends to spin off its Homes product portfolio and ADI global distribution business, as well as its Transportation Systems business, into 2 standalone, publicly-traded companies.

The Homes and Global Distribution business will include security markets and security and fire protection products as well as home heating, ventilation and air conditioning controls. It will have about 13,000 employees and is expected to have annualized revenue of approximately $4.5 billion, according to the company.

Meanwhile, the Transportation Systems business will serve a range of engine types across global automobile, truck and other vehicle markets and will have about 6500 workers.

“Today’s announcement marks the culmination of a rigorous portfolio review involving a detailed assessment of every Honeywell business. As part of that review, we analyzed 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.

According to Adamczyk, the reduced size will allow for rapid organic growth at Honeywell and its spin-offs and expects more aggressive capital deployment.

“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,” Adamczyk said.

According to a shareholder presentation, strategic rationale for the Homes and Global Distribution separation include:

* More opportunities to grow inorganically through targeted capital allocation
* Investment optimization to capture evolving end market dynamics
* Improved focus on B2C and distribution business segments
* Honeywell says the spin-off creates a more focused, growth-oriented and synergistic portfolio that creates clear opportunities for further scale in every business.

Honeywell has also announced 3rd quarter results. Sales are expected to be $US10.1 billion, up 3 per cent reported and up 5 per cent organic, and earnings per share is expected to be $1.75, up 9 per cent reported and up 16 per cent ex-divestitures, normalized for tax at 26 per cent.  ♦