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Honeywell Primes for Streamlined Future with Strategic Divestitures

Honeywell (HON) has launched a new phase in its transformation journey.

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Ahead of its planned three-way split, the industrial conglomerate is evaluating strategic options for two of its transportation and logistics-focused businesses. The move underscores its commitment to sharpening focus on core, high-margin operations.

Divesting Non-Core: Why PSS and WWS Are on the Block
Honeywell announced plans to explore “strategic alternatives” — including potential sales — for its Productivity Solutions & Services (PSS) and Warehouse & Workflow Solutions (WWS) divisions. Each unit brought in roughly $1 billion in sales last year, offering technologies like barcode scanners, conveyor systems, robotics, and warehouse management software. But these units stand apart from Honeywell’s strategic vision, with operational dynamics better suited to specialized buyers. With annual revenue near $4.8 billion for its automation segment, which includes PSS and WWS, the spin-off aligns with the company’s broader simplification agenda.

Sharper Focus Ahead of Breakup
This refinement is part of Honeywell’s broader plan to split into three focused entities: automation, aerospace, and advanced materials. The advanced materials unit is expected to separate by late 2025 or early 2026, followed by the aerospace division in mid-2026. Post-breakup, the remaining automation arm — ex-PSS and WWS — will house building and process controls, targeting long-term, high-growth industrial sectors. CEO Vimal Kapur stated that these moves will create a leaner, efficiency-driven business. Incoming Process Automation CEO Jim Masso, formerly with GE, is poised to lead this more agile enterprise.
 
Investor Confidence and Market Reaction
Investors have responded positively. Honeywell shares ticked up over 13 percent in the past year, with much of the gain coming in the last month as the breakup strategy gained traction. The stock rose roughly 0.4 percent to $240.41 following the announcement, outperforming flat-to-down broader markets. Barclays analyst Julian Mitchell upgraded his view, noting that pure-play aerospace names, like GE Aerospace (trading at about 44 times forward earnings), deserve higher valuation multiples than Honeywell’s current 23 times. With a $258 price target now in view, institutional confidence is clear that rationalizing assets will unlock shareholder value.

Conclusion
Honeywell’s move to shed its PSS and WWS divisions reflects a deliberate pivot toward streamlined, high-margin industrial businesses. By pruning peripheral operations ahead of its 2026 breakup, the company aims to sharpen strategic focus, enhance capital allocation, and elevate investor returns. As Honeywell divides into three nimble, market-focused firms, the industrial landlord of tomorrow is taking shape—leaner, sharper, and primed for performance.


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