HON Honeywell International Inc

By David Benoit and Thomas Gryta 

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.

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%, or $39.3 billion, of its 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.

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

(END) Dow Jones Newswires

April 27, 2017 18:27 ET (22:27 GMT)

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