Honey­well to spin off two units

The Phnom Penh Post - - BUSINESS - Amie Tsang

THE US tech­nol­ogy and man­u­fac­tur­ing com­pany Honey­well an­nounced on Tues­day that it planned to spin off parts of its busi­ness but would re­tain its aerospace tech­nol­ogy op­er­a­tions, against the rec­om­men­da­tions of an ac­tivist in­vestor.

Honey­well had been un­der pres­sure to pur­sue an over­haul after Daniel Loeb, the ac­tivist in­vestor in charge of the hedge fund Third Point, urged it to spin off the aerospace unit.

Honey­well re­jected Loeb’s urg­ings, how­ever, and said that it would in­stead split off its homes and global dis­tri­bu­tion units, which have about $4.5 bil­lion of rev­enue a year, and its trans­porta­tion sys­tems unit, which has about $3 bil­lion in rev­enue, into two pub­licly traded companies by the end of 2018.

The op­er­a­tions be­ing spun off would be “bet­ter po­si­tioned to max­imise share­owner value through fo­cused strate­gic de­ci­sion mak­ing and cap­i­tal al­lo­ca­tion tai­lored for their end mar­kets”, Dar­ius Ad- am­czyk, the com­pany’s pres­i­dent and chief ex­ec­u­tive, said in a news re­lease.

Al­though the move by Honey­well was not in line with what Loeb and Third Point had ad­vo­cated, the hedge fund none­the­less ex­pressed sup­port for Adam­czyk and his plans to stream­line the com­pany.

“We are pleased that the board and man­age­ment chose to con­duct a thor­ough port­fo­lio re­view and agreed that Honey­well should nar­row its busi­ness fo­cus,” a Third Point spokes- woman said in a state­ment.

The homes busi­ness Honey­well is spin­ning off will deal with heat­ing, ven­ti­la­tion and air-con­di­tion­ing, and with the dis­tri­bu­tion of se­cu­rity and fire pro­tec­tion prod­ucts. It will be run by Gary Michel, who has moved from the man­u­fac­turer Inger­soll Rand, Honey­well said.

The trans­porta­tion busi­ness will fo­cus on tech­nol­ogy used in cars, trucks and other ve­hi­cles.

The com­pany in­di­cated that more deals could be on the hori­zon.

“Honey­well will also have mul­ti­ple levers for con­tin­u­ing to ex­e­cute an ag­gres­sive cap­i­tal de­ploy­ment strat­egy,” in­clud­ing a “vigorous and dis­ci­plined” merg­ers and ac­qui­si­tions pro­gram, Adam­czyk said in the news re­lease.

“We’re ac­tive in the market right now,” he said by tele­phone in a sub­se­quent in­ter­view, “but val­u­a­tions are quite high.”

The spinoffs come after United Tech­nolo­gies, which had re­jected a deal with Honey­well, agreed in Septem­ber to buy the air­plane parts maker Rock­well Tech­nolo­gies for $30 bil­lion, in­clud­ing debt.

Dur­ing its pur­suit of United, Honey­well had ar­gued that com­bin­ing the companies would cre­ate a “well­bal­anced port­fo­lio” of sales across the aerospace, homes and build­ings, mil­i­tary con­tract­ing and en­ergy sec­tors.

LUKE SHARRETT/THE NEW YORK TIMES

Then-US Pres­i­dent Barack Obama speaks with em­ploy­ees at the Honey­well In­ter­na­tional fa­cil­ity dur­ing a com­pany tour, in Golden Val­ley, Min­nesota, on June 1, 2012.

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