Honeywell is betting its breakup will generate huge value like GE’s did, but that’s not a guarantee. The empire’s first move since splitting into three pieces came this week when Honeywell’s former chemicals and polymers arm, now called Solstice Advanced Materials, announced a $14.5 billion takeover of chip-materials maker Element Solutions.
Shares of Honeywell Aerospace are down 10% since its spinoff last week. (Solstice shares have also plunged 20% off its stock-heavy deal.) But it’s also expected to do some big deals once it gets a handle on its debt load, and is now free to focus on its “singular strategy” of building hardware for commercial and defense customers, CEO Jim Currier told Semafor.
GE laid the modern roadmap for the spinoff with a home-run split in 2021. A dollar invested in GE just before it announced the move would be worth more than $7 today across three separate companies in aerospace, energy, and healthcare. That same dollar invested in the S&P 500 would be worth about $1.70.
But Harvard Business Review found that the playbook is hard to replicate. Out of 350 company spinoffs valued at greater than $1 billion between 2000 and 2020, half failed to create any new shareholder value two years after the breakup, and another quarter destroyed value.
