Honeywell announced the results of its comprehensive portfolio review, including its intention to separately spin off its Homes product portfolio and ADI global distribution business, as well as its Transportation Systems business, into two stand-alone, publicly-traded companies.
The planned separation transactions are intended to be tax-free spins to Honeywell shareowners for U.S. federal income tax purposes and are expected to be completed by the end of 2018, the company described in a press release.
“Today’s announcement marks the culmination of a rigorous portfolio review involving a detailed assessment of every Honeywell business,” said Honeywell President and CEO Darius Adamczyk. “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.”
Adamczyk said the remaining Honeywell portfolio will consist of high-growth businesses in six industrial end markets, each aligned to global mega trends including energy efficiency, infrastructure investment, urbanization and safety.
“The spun businesses will be better positioned to maximize shareowner value through focused strategic decision making and capital allocation tailored for their end markets,” Adamczyk said.
The new Homes and Global Distribution business will be a provider of home heating, ventilation and air conditioning (HVAC) controls and security markets, and a global distributor of security and fire protection products. The business is expected to have annualized revenue of approximately $4.5 billion, a high-yield credit rating, approximately 13,000 employees and financial responsibility for certain Honeywell legacy liabilities.
The planned separations will not require a shareowner vote. Each spin-off will be subject to finalization of the contours of the spun-off business, assurance that the separation will be tax-free to Honeywell shareowners for U.S. federal income tax purposes, finalization of the capital structure of the three corporations, the effectiveness of appropriate filings with the U.S. Securities and Exchange Commission, final approval of the Honeywell Board of Directors, and other customary matters.
Effective immediately, Gary Michel will serve as president and CEO of Honeywell’s Home and Building Technologies (HBT) strategic business group. Michel will report to Adamczyk and serve as a company officer. Michel succeeds Terrence Hahn, who will move to a leadership role reporting to Adamczyk and will help prepare the Homes and ADI businesses for the spin off.