Jeffrey R. Greene and Jeff Wray
In October 2017, Honeywell announced not one but two divestments representing close to US$7.5 billion in revenues. It planned to execute each via a tax-free spin-off and receive total dividends of US$3 billion at closing. For most companies, a single carve-out would be a major undertaking. For Honeywell, these were just two more transactions in a 15-year journey of prolific portfolio reshaping that included close to 100 acquisitions interspersed with 70 divestments.
The most recent moves resulted from a comprehensive portfolio review process that the new CEO, Darius Adamczyk, described as “objective and fact-based, involving extensive analysis and input from industry experts and participants as well as from our shareowners. The foundation of the announcement was a set of criteria … against which each business was measured.”1 Responding to an analyst’s question about future investments, he went on to say, “So the punchline for me is, we’re going to be very active in the M&A arena. In terms of prioritization, I think now, given these two spins and given … the optimized capital structure, I’m very excited about investing in any of the four [remaining business] platforms.”
Even Daniel Loeb, the prominent shareholder activist who had been agitating for a different path, said through a spokeswoman that he was pleased the board and management chose to conduct a thorough portfolio review and ...