Honeywell has announced a plan to spin off its Advanced Materials business into an independent, U.S. publicly traded company, which is targeted to be completed by the end of 2025 or early 2026. Honeywell expects to execute this plan in a tax-free manner to its shareowners.
“Given the sustained market demand for advanced specialty chemicals and materials around the globe, we are confident now is the right time for this business to grow independently, leveraging its leading technologies and deep customer relationships. As a sector leader, this new company will have a greater strategic focus on innovation, enabling it to develop new, more sustainable solutions and products with next-generation chemistry to create further value for shareowners,” says Vimal Kapur, chairman and CEO of Honeywell.
The planned spin-off is expected to create value for all stakeholders as both Honeywell and the Advanced Materials business will benefit from:
- A simplified strategic focus;
- A greater financial flexibility to pursue prioritized organic growth opportunities throughout investment cycles;
- An improved ability to customize capital allocation priorities in alignment with strategic focus; and
- Distinct investment profiles that position each company to unlock greater long-term value for shareowners.
The planned spin-off of the Advanced Materials business follows four recent acquisitions Honeywell announced as part of its capital deployment strategy. In the past year, Honeywell completed the acquisitions of: Carrier Access Solutions, Civitanavi, CAES and Air Products’ liquified natural gas (LNG) business.
Honeywell is currently on track to exceed its commitment to deploy at least $25 billion toward capital expenditures, dividends, share purchases and acquisitions through 2025, with approximately $9 billion deployed towards acquisitions to date in 2024.
Advanced Materials
Upon completion of the spin-off, the Advanced Materials business will be a sustainability-focused specialty chemicals and materials pure play with leading positions across fluorine products, electronic materials, industrial grade fibers, and health care packaging solutions. Advanced Materials is expected to have FY24 estimated revenue of between $3.7 billion and $3.9 billion.
Transaction details
The planned spin-off transaction is targeted for completion by the end of 2025 or early 2026, subject to certain customary conditions, including, among others, the filing and effectiveness of applicable filings (including a Form 10 registration statement) with the U.S. Securities and Exchange Commission, assurance that the spin-off of the Advanced Materials business will be tax-free to Honeywell’s shareowners, receipt of applicable regulatory approvals and final approval by Honeywell’s board of directors. Approval by Honeywell’s shareowners is not required.
The spin transaction will not impact Honeywell’s FY24 guidance.
As the process progresses, Honeywell intends to provide additional information regarding the future management team and board of directors for the independent Advanced Materials company.
Goldman Sachs & Co. LLC is serving as a financial advisor to Honeywell. Skadden, Arps, Slate, Meagher & Flom LLP is providing external legal counsel.