Activist investor Elliott Investment Management has taken a more than 5 billion stake in Honeywell International and is calling for the conglomerate to split into two separate companies.
In a letter sent to Honeywell's board, Elliott said that the Charlotte, North Carolina-based company needs to simplify its structure as it deals with uneven execution, inconsistent financial results and an underperforming stock price.
Elliott is advising Honeywell to separate its automation and aerospace businesses.
"As independent entities, Honeywell Aerospace and Honeywell Automation would benefit from simplified strategies, focused management, improved capital allocation, better operational performance, enhanced oversight, and numerous other benefits now enjoyed by dozens of large businesses that have moved on from the conglomerate structure, including former conglomerates General Electric, United Technologies, and many more," Elliott wrote.
The activist investor believes splitting up the aerospace and automation businesses would result in share-price gains of 51 to 75 over the next two years.
