Portfolio Changes at Honeywell
Gary Michel leads Honeywell’s Home and Building Technologies (HBT) strategic business group
Honeywell announced the results of its comprehensive portfolio review, including its intention to separately spin off its Homes product portfolio and ADI global distribution business, as well as its Transportation Systems business, into two stand-alone, publicly-traded companies. The planned separation transactions are intended to be tax-free spins to Honeywell shareowners for U.S. federal income tax purposes and are expected to be completed by the end of 2018.
“Today’s announcement marks the culmination of a rigorous portfolio review involving a detailed assessment of every Honeywell business. As part of that review, we analyzed numerous criteria, including growth outlook, financial performance, market dynamics, potential for disruption, and, most importantly, assessment of fit as a Honeywell business,” said Honeywell President and CEO Darius Adamczyk.
“The remaining Honeywell portfolio will consist of high-growth businesses in six attractive industrial end markets, each aligned to global mega trends including energy efficiency, infrastructure investment, urbanization and safety. These businesses are best positioned to leverage Honeywell synergies from our technologies, financial and business models, and talent. Our simplified portfolio will offer multiple platforms for organic growth and margin expansion through further deployment of our worldclass HOS Gold operating system and the Honeywell Sentience Platform. Honeywell will also have multiple levers for continuing to execute an aggressive capital deployment strategy, including a vigorous and disciplined M&A program.
“The spun businesses will be better positioned to maximize shareowner value through focused strategic decision making and capital allocation tailored for their end markets,” Adamczyk said. “At Honeywell, we will continue our track record of execution, delivering growth, margin expansion, and aggressive capital allocation for our shareowners.”
Homes and Global Distribution business: HVAC controls plus security and fire protection products
The new Homes and Global Distribution business will be a leader in the home heating, ventilation and air conditioning (HVAC) controls and security markets, and a leading global distributor of security and fire protection products.
The business is expected to have annualized revenue of approximately $4.5 billion, a high-yield credit rating, approximately 13,000 employees, and financial responsibility for certain Honeywell legacy liabilities.
The new Transportation Systems business will be a global leader in turbocharger technologies with best-in-class engineering capabilities for a broad range of engine types across global automobile, truck and other vehicle markets. The business is expected to have annualized revenue of approximately $3 billion, a high-yield credit rating, approximately 6,500 employees and financial responsibility for Honeywell legacy automotive segment liabilities in an amount equal to our Bendix legacy asbestos liability.
The planned separations will not require a shareowner vote. Each spin-off will be subject to finalization of the contours of the spun-off business, assurance that the separation will be tax-free to Honeywell shareowners for U.S. federal income tax purposes, finalization of the capital structure of the three corporations, the effectiveness of appropriate filings with the U.S. Securities and Exchange Commission, final approval of the Honeywell Board of Directors, and other customary matters.
New Leader Appointed for Home and Building Technologies Business Group
Effective immediately, Gary Michel will serve as president and CEO of Honeywell’s Home and Building Technologies (HBT) strategic business group. Michel will report to Adamczyk and serve as a company officer. Michel succeeds Terrence Hahn, who will move to a leadership role reporting to Adamczyk and will help prepare the Homes and ADI businesses for the spin.
Michel joins Honeywell from Ingersoll-Rand Company, where he has held a series of large leadership roles over the past 32 years. Most recently, he served as senior vice president and president, Residential HVAC and Supply, which he transformed to deliver substantial improvements in revenue and market share, operating income, commercialization processes, and technology platforms. Michel has also led Ingersoll-Rand’s Club Car; Road Development - Construction Technologies; and Utility Equipment-Construction Technologies businesses. Michel has held several other roles, including executive director,
Corporate Development, and general manager, Aftermarket Division, for Europe, the Middle East and Africa. Michel earned his B.S. in mechanical engineering at Virginia Tech and his M.B.A. at the University of Phoenix.
“Gary has proven himself to be an innovative and energetic leader with a deep understanding of his customers and end markets and the ability to translate this knowledge into technology-differentiated offerings that bring value to customers,” Adamczyk said. “Gary is a welcome addition to our team and will help Honeywell continue to be a leader in connected technologies, building on our great positions in growing industries.”
Smart Energy Business to Align with Performance Materials and Technologies
In addition, Honeywell’s Smart Energy business unit, previously part of HBT, will immediately be integrated into the Process Solutions unit within Honeywell Performance Materials and Technologies. Honeywell Smart Energy enables utilities and distribution companies to deploy advanced capabilities that transform operations, improve reliability and environmental sustainability, and better serve customers. Its wide array of meter offerings will complement an existing meter portfolio within Process Solutions.
Honeywell’s Process Solutions unit is a pioneer in process automation control and industrial cybersecurity, and a global leader in optimizing and protecting manufacturing assets in the refining, pulp and paper, industrial power generation, chemicals and petrochemicals, biofuels, pharmaceuticals, and metals,
minerals and mining industries.
“Both Smart Energy and Process Solutions have deep expertise in metering, large project roll-outs and software, and both can leverage the Honeywell Sentience Platform to utilize vast quantities of user data to generate new products and services that help customers operate more efficiently,” Adamczyk
said. “Both businesses are project-based with opportunities for recurring revenue streams. We are excited about the combination of these two businesses, which will allow them to expand their respective capabilities and serve a broader set of customers.”