Honeywell Plans Spinoff of Advanced Materials Unit

Honeywell (HON) shares are rising 3% in premarket trading after the conglomerate said it plans to spin off its Advanced Materials division as it joins its peers in pursuing a more focused strategy.

The conglomerate said the unit, whose brands include Solstice and Spectra, will be a “leading provider of sustainability-focused specialty chemicals and materials” with the tax-free spinoff to shareholders targeted to be completed by the end of 2025 or early 2026.

“Given the sustained market demand for advanced specialty chemicals and materials around the globe, we are confident now is the right time for this business to grow independently, leveraging its leading technologies and deep customer relationships,” Honeywell Chief Executive Officer (CEO) Vimal Kapur said.

Honeywell To Focus on Automation, Aviation, Energy Transition

Honeywell said the spinoff will help the company simplify its portfolio “around three compelling megatrends: automation, the future of aviation, and energy transition.”

Honeywell said Advanced Materials is expected to report between $3.7 billion and $3.9 billion in fiscal 2024 revenue with an EBITDA margin greater than 25%.

According to The Wall Street Journal,  which earlier reported the plan, the division could be worth more than $10 billion as a separately traded public company.

Honeywell shares had fallen around 3% this year through Monday’s close, while the S&P 500 had added nearly 20%.