Elliott takes more than $5B stake in Honeywell, advises separating automation, aerospace units

Activist investor Elliott pool Management has taken a more than $5 billion stake in Honeywell International and is calling for the industrial conglomerate to split into two divide companies.

In a note sent to Honeywell’s board, Elliott said that the Charlotte, North Carolina-based corporation needs to simplify its structure as it deals with uneven execution, inconsistent monetary results and an underperforming distribute worth.

Elliott is advising Honeywell to divide its automation and aerospace businesses.

“As independent entities, Honeywell Aerospace and Honeywell Automation would advantage from simplified strategies, concentrated management, improved pool distribution, better operational act, enhanced oversight, and numerous other benefits now enjoyed by dozens of large businesses that have moved on from the conglomerate structure, including former conglomerates General Electric, United Technologies, and many more,” Elliott wrote.

The activist investor believes splitting up the aerospace and automation businesses would outcome in distribute-worth gains of 51% to 75% over the next two years. Over the history five years, the distribute has gained about 7% on an annualized basis, or less than half the S&P 500 profitability.

“Honeywell’s board of directors and management acknowledge and appreciate the perspectives of all our shareholders,” Stacey Jones, chief communicator at Honeywell, said in a statement. “Although Elliott had not made us aware of their views prior to today, we look forward to engaging with the firm to obtain their input. Our leadership welcomes investor feedback as we continue to execute a disciplined way, which includes pursuing sustainable growth, optimizing the startup distribution collection, and maintaining an accretive pool deployment program.”

In the third quarter, Honeywell reported turnover growth but net returns dipped a bit although returns per distribute topped analyst forecasts. The corporation said it would spin off its advanced materials business by early 2026 and said its board approved a boost in its annual money payout, to $4.52 per distribute from $4.32 per distribute.

Elliot’s stake makes it one of Honeywell’s largest shareholders. It has a long history of activism, most recently at Southwest Airlines where the carrier last month agreed to overhaul its board of directors.

Shares of Honeywell rose 3% in afternoon market activity Tuesday.