Investing.com -- Honeywell (NASDAQ:HON) is expected to announce plans to spin off its advanced materials unit in a tax-free separation, The Wall Street Journal has reported, citing people familiar with the matter.
The division could be worth over $10 billion as a separately traded public company, the paper reported. It is on pace to register around 10%, or approximately $3.8 billion, of Honeywell's total sales this year, the WSJ said.
The materials business specializes in everything from polymers to performance fluids and employs over 3,000 people, according to Honeywell's website. By separating it, Honeywell hopes that both it and the remaining entity will have greater financial flexibility to pursue other opportunities, the WSJ reported.
North Carolina-based Honeywell, a sprawling industrial conglomerate whose operations range from aerospace to building automation, currently has a market capitalization of about $132.4 billion.
Shares in the firm rose by more than 2% in premarket US trading.
Chief Executive Officer Vimal Kapur, who took over at the helm of the company in June 2023, has been pushing to streamline Honeywell's portfolio to focus on its aviation, automation and energy divisions.
Kapur has overseen a raft of recent acquisitions, including an about $5 billion deal to purchase Carrier Global (NYSE:CARR)'s security business, a $2 billion agreement for defense technology firm CAES Systems and a $1.8 billion purchase of liquefied natural gas process technology group Air Products (NYSE:APD).
In July, Honeywell slashed its annual profit forecast due to weaker demand at its industrial automation segment, which was hit by softer volumes following a drive to offload existing inventory prior to ordering new products.
The company said it now projects a full-year adjusted profit of $10.05 to $10.25 per share, compared to its prior outlook of $10.15 to $10.45 a share.
(Reuters contributed reporting.)