Honeywell to spin off Home and ADI Global Distribution business

Gary Michel to lead Honeywell's Home and Building Technologies strategic business group
 - 
Tuesday, October 10, 2017

MORRIS PLAINS, N.J.—Honeywell announced today plans to spin its $4.5 billion Home and ADI Global Distribution business, which includes its security business, and its $3.0 billion Transportation Systems business, into two independent, publicly-traded companies by end of 2018. The planned separation transactions are intended to be tax-free spins to Honeywell shareowners for U.S. federal income tax purposes.

“The new independent company will include home heating, ventilation and air conditioning (HVAC) controls, residential security products, and the ADI Global Distribution business,” Adrienne Zimoulis, strategic communications leader, Honeywell Security and Fire, told Security Systems News, noting that the fire safety business will remain part of Honeywell. “The intended spin-off will likely be completed toward the end of 2018, and we will continue to remain focused on delivering the connected homes and connected building solutions our customers can count on.”  

Honeywell president and CEO Darius Adamczyk said in the announcement that the decision was made after "a rigorous portfolio review involving a detailed assessment of every Honeywell business,” noting that the company analyzed numerous criteria, including growth outlook, financial performance, market dynamics, potential for disruption, and, most importantly, assessment of fit as a Honeywell business.

“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.”

The new Homes and Global Distribution 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, according to the press release.

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.

“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.”

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 has an investor conference planned for today to discuss the transactions, although in the announcement the company noted that 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,” the press release reads.

Tags: