Honeywell announced on 10th this month 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.
“Today’s announcement marks the culmination of a rigorous portfolio review involving a detailed assessment of every Honeywell business. 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,” said Honeywell President and CEO Darius Adamczyk.
The remaining Honeywell portfolio will consist of high-growth businesses in six attractive industrial end markets, including energy efficiency, infrastructure investment, urbanization and safety. And Honeywell’s simplified portfolio will offer multiple platforms for organic growth and margin expansion through further deployment of its world-class HOS Gold operating system and the Honeywell Sentience Platform. Honeywell will also have multiple levers for continuing to execute an aggressive capital deployment strategy, including a disciplined M&A program.
The new Homes and Global Distribution business will be a leader in the home heating, ventilation and air conditioning (HVAC) controls and security markets, and a leading 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.
In addition, 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 joins Honeywell from Ingersoll-Rand Company, where he has held a series of large leadership roles over the past 32 years. Most recently, he served as senior vice president and president, Residential HVAC and Supply, which he transformed to deliver substantial improvements in revenue and market share, operating income, commercialization processes, and technology platforms. “Gary has proven himself to be an innovative and energetic leader with a deep understanding of his customers and end markets and the ability to translate this knowledge into technology-differentiated offerings that bring value to customers,” Adamczyk said.
Also, Honeywell’s Smart Energy business unit, previously part of HBT, will immediately be integrated into the Process Solutions unit within Honeywell Performance Materials and Technologies. Honeywell Smart Energy enables utilities and distribution companies to deploy advanced capabilities that transform operations, improve reliability and environmental sustainability, and better serve customers. Its wide array of meter offerings will complement an existing meter portfolio within Process Solutions.
“Both Smart Energy and Process Solutions have deep expertise in metering, large project roll-outs and software, and both can leverage the Honeywell Sentience Platform to utilize vast quantities of user data to generate new products and services that help customers operate more efficiently,” Adamczyk said. “Both businesses are project-based with opportunities for recurring revenue streams. We are excited about the combination of these two businesses, which will allow them to expand their respective capabilities and serve a broader set of customers.”