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Honeywell (HON) announced its intention to evaluate strategic alternatives for its Productivity Solutions and Services (PSS) and Warehouse and Workflow Solutions (WWS) businesses, aligning with its ongoing portfolio streamlining strategy, and ahead of the planned separation of Solstice Advanced Materials by late 2025 or early 2026 and Honeywell Aerospace in the second half of 2026. 

This move reflects a deliberate effort to simplify the company’s structure, focusing on high-growth, high-margin businesses to accelerate value creation for shareholders. By divesting or spinning off non-core units, HON aims to enhance operational efficiency, sharpen capital allocation, and unlock trapped value within its diversified portfolio, potentially leading to higher valuations for its remaining businesses and improved shareholder returns.

• The PSS business provides mobile computing, data collection, and software solutions, primarily serving retail, healthcare, and transportation sectors with technologies like barcode scanners and rugged mobile devices. WWS, meanwhile, focuses on warehouse automation, offering systems such as conveyor belts, robotic picking solutions, and warehouse management software, catering to e-commerce and logistics industries. HON’s decision to explore strategic alternatives for these units likely stems from their distinct operational profiles and market dynamics, which differ from its core industrial and aerospace focus.
• Both businesses operate in competitive, fast-evolving markets requiring significant R&D and capital investment to maintain leadership, potentially straining HON’s resources. Divesting or partnering these units could allow HON to redirect capital toward higher-return opportunities while enabling PSS and WWS to thrive under ownership better suited to their specialized needs.
• Financially, PSS and WWS are significant contributors to HON’s Automation segment, which generated approximately $4.8 bln in revenue in 2024, with PSS and WWS estimated to account for roughly $2.5-$3 bln combined. Operating margins for these businesses are solid, likely in the mid-teens, driven by steady demand for automation solutions, though below HON’s core aerospace margins (20-25%). Their growth has likely been muted, as illustrated by HON's Industrial Automation business experiencing organic net sales growth of -7% in 2024, while capital intensity and competitive pressures may also limit upside potential relative to HON’s other units.
• Still, given their scale, technological leadership, and exposure to high-growth sectors, both businesses are likely to attract healthy interest from strategic buyers (e.g., Zebra Technologies, Rockwell Automation) and private equity firms with expertise in automation and tech.
• Post-separations, HON is poised to emerge as a leaner, more focused industrial technology company, centered on its Building Technologies and remaining automation businesses, alongside a standalone Aerospace entity and Solstice Advanced Materials as separate public companies. The Honeywell Automation business (the "remaining" Honeywell after the spin-offs) is projected to generate $18 bln in annual revenue based on 2024 figures, with an operating margin target likely be aligned with or exceed the 20% mark, given their focus on high-value automation. Meanwhile, the Honeywell Aerospace business is projected to generate $15 bln in annual revenue with operating margins potentially exceeding 25%.

HON’s evaluation of strategic alternatives for PSS and WWS is a strategic step to refine its portfolio, aligning with its broader streamlining efforts. By unlocking value from these businesses, HON aims to enhance shareholder returns while positioning itself as a more focused, high-margin industrial leader.