Correction to Third Point Calls for Honeywell to Spin Off Aerospace Unit

By David Benoit and Thomas Gryta Features Dow Jones Newswires

Activist investor Third Point LLC disclosed it has taken a stake in Honeywell International Inc. and called on the conglomerate's newly appointed chief executive to spin off its aerospace business.

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The aerospace unit has been a drag on the company's performance and separating it "would result in a sustained increase in shareholder value in excess of $20 billion," Daniel Loeb's Third Point wrote in a letter to its investors Thursday. The activist argued organic growth at the unit has lagged behind that of its peers.

Honeywell said it would conduct a review of the potential separation of its aerospace business. "Honeywell's management and Board regularly conduct portfolio assessments and have a demonstrated track record of effective portfolio realignment and capital deployment actions," the company said.

Honeywell, which has a market value of about $100 billion, makes everything from aircraft landing gears to home thermostats. The aerospace business accounts for about 37.5% of its $39.3 billion annual sales. The segment's revenue declined 3% in 2016.

Shares of Honeywell jumped 4.7% to $136.00 on the news in after-hours trading Thursday.

Third Point's approach comes a few weeks after Darius Adamczyk took over as Honeywell's CEO from longtime leader David Cote, who remains the company's chairman.

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Write to David Benoit at david.benoit@wsj.com and Thomas Gryta at thomas.gryta@wsj.com

Corrections & Amplifications

This item was corrected at 7:52 p.m. ET to clarify that The aerospace business accounts for about 37.5% of Honeywell's $39.3 billion annual sales. The original incorrectly implied that $39.3 billion was that fraction of its annual sales in the sixth paragraph.

The aerospace business accounts for about 37.5% of its $39.3 billion annual sales. "Third Point Calls for Honeywell to Spin Off Aerospace Unit," at 6:12 p.m. ET and subsequent updates, incorrectly implied that $39.3 billion was that fraction of its annual sales in the sixth paragraph. (April 27, 2017)

(END) Dow Jones Newswires

April 27, 2017 20:02 ET (00:02 GMT)