• Could attract strategics if it goes sale route
• Segment represents about 40% of Honeywell revenue

Honeywell International [NYSE:HON] is working with Goldman Sachs to explore a potential separation of its aerospace business, said four sources familiar with the matter.

In addition to a spinoff, a sale of the aerospace business is also a possibility, the four sources said. One of these sources added the Charlotte, North Carolina-based industrial conglomerate could decide to sell the aerospace business in pieces to maximize the proceeds. Strategics are likely to show interest in the event of a sale, two of the sources said.

This week, Honeywell announced it was exploring additional strategic alternatives including the potential separation of its aerospace business. Last month, Elliott Investment Management, whose funds together have invested more than USD 5bn in Honeywell, sent a letter to its board of directors calling for a simplification of Honeywell’s conglomerate structure. Elliott recommended that Honeywell pursue a separation of Aerospace and Automation. In a press release this week, Elliott said it welcomed Honeywell’s announcement of its ongoing review of strategic alternatives, including the separation of its Aerospace business.

Honeywell operates in four segments: Aerospace Technologies, Industrial Automation, Building Automation, and Energy and Sustainability Solutions.

For the nine months ended 30 September 2024, Honeywell’s aerospace business had close to USD 11.5bn in sales, up around 15% from the same period a year prior when it had USD 9.95bn in revenue. The aerospace business comprised about 40% of Honeywell’s overall USD 28.4bn in sales for the nine months ended 30 September 2024.

Honeywell’s aerospace segment is a provider of products, software, and services for aircraft that it sells to original equipment manufacturers and other customers in a variety of end markets including air transport, regional, business and general aviation aircraft, airlines, aircraft operators, and defense and space contractors.

Since December 2023, Honeywell has announced a number of strategic actions to drive organic growth and simplify its portfolio following the realignment of its business segments, as noted in the press release. This includes approximately USD 9bn of accretive acquisitions: the Access Solutions business from Carrier Global, Civitanavi Systems, CAES Systems, and the liquefied natural gas (LNG) business from Air Products. In addition, the company announced a plan to spin off its Advanced Materials business into an independent, publicly traded company, and entered into an agreement to divest the company’s Personal Protective Equipment business. Goldman Sachs is also advising on the Advanced Materials spin-off.

Honeywell, Elliott and Goldman Sachs declined to comment.