Activist investor Elliott Investment Management has taken a more than $5 billion stake in Honeywell International Inc (NYSE:HON, ETR:ALD) and is pushing for the industrial giant to split up its aerospace and automation businesses.
In a letter to the company’s board on Tuesday, Elliott said Honeywell would benefit from a simplified structure and a separation could create two sector leaders that could perform better and benefit customers, employees and shareholders.
Elliott believes the separation could boost Honeywell’s share price by 51% to 75% in the next two years.
It believes "uneven execution, inconsistent financial results and an underperforming share price" have hurt Honeywell over the past five years.
It added that “the conglomerate structure that once suited Honeywell no longer does.”
The activist investor said it wants to work with the company and has requested a meeting.
In response to media inquiries, Honeywell said it looks forward to engaging with Elliott, though it had no prior knowledge of its investment.
Since Vimal Kapur took over as CEO of Honeywell last year, the company has been offloading assets that do not align with its focus on automation, aviation and the energy transition.
Last month, Honeywell announced plans to spin off its advanced materials unit into a separate public company and separately said it plans to divest its personal protective equipment business.
Shares of Honeywell moved higher on the news of Elliott’s investment, up 2.9% at $231.73 late morning on Tuesday.