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Following activist investor pressure, Honeywell International (HON) confirmed plans to split its businesses into three companies: Honeywell Automation, Honeywell Aerospace, and Advanced Materials.
RBC Capital Markets managing director Deane Dray joins Julie Hyman and Josh Lipton on Market Domination to examine Honeywell's announcement and explain what investors can expect from the split.
"Honeywell was the last outlier in a trend that's gone on for more than five years ... the urge to demerge," Dray says.
Dray notes that GE and United Technologies are two successful use cases of the demerging trend, noting that doing so can "unlock value." The analyst also explains that "conglomerate" is "pejorative now because it implies that you have businesses that have been put together without an underlying strategy," noting that "multi-industry" is the preferred term.
"Specialization, simplification, focused portfolio — that's what the market wants," Dray says. "[In the] longer term, you will get back into an M&A consolidation cycle. It won't look like the conglomerates of the 70s, but you will see companies making acquisitions in close adjacencies, and that will be the new modern version of the multi-industry sector."
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Catch Yahoo Finance's full interview with Honeywell CEO Vimal Kapur at the 2025 World Economic Forum here.
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This post was written by Naomi Buchanan.