Big Changes Loom for Honeywell in Kansas City as Activist Investor Seeks Major Restructuring

Big Changes Loom for Honeywell in Kansas City: What You Need to Know

Kansas City, prepare for some potential big changes as an influential activist investor has set its sights on Honeywell International, the company behind the sprawling Kansas City National Security Campus. This significant move could impact more than 7,000 jobs in our area!

The Push for Change

On Tuesday, Florida-based Elliott Investment Management made headlines after investing a whopping $5 billion in Honeywell, marking it as their largest single investment ever in one company. But they’re not just here to help; they are advocating for some major changes at the company. Their proposal? To spin off Honeywell’s Aerospace division along with its Automation division.

What’s at Stake?

So why is Elliott making such a fuss? The Kansas City National Security Campus, which operates under Honeywell’s aerospace sector, is where the magic happens. It’s not just a stretch of land; it’s a 192-acre facility that manufactures non-nuclear components for the U.S. nuclear stockpile. And guess what? It’s growing! Recently, an expansion added 450,000 square feet of manufacturing space to keep up with the government’s modernization efforts in the nuclear realm.

Tax Breaks and Expansion Plans

In July, Missouri Governor Mike Parson rolled out a law ensuring tax exemptions for plans to add more than 2.5 million square feet of facilities over the next 10-15 years at the campus. That should give a boost to operations and keep jobs safe – at least for now.

Why the Split? Elliott’s Vision

Elliott believes that splitting Honeywell Aerospace and Honeywell Automation into independent companies will lead to better focus and management. In their letter to the Honeywell board, Elliott argued that both divisions would benefit significantly from this shift. They claim this structure could lead to better capital allocation, enhanced oversight, and improved operational performance—benefits already seen by successful companies that once operated as conglomerates, like General Electric and United Technologies.

What’s in Store?

Elliott’s managing partner, Jesse Cohn, along with partner Marc Steinberg, is eager to discuss their analysis with the Honeywell International board. Not only do they foresee significant value in spinning off these divisions—expecting each to be worth over $100 billion—but they also project a potential 51% to 75% increase in share price for Honeywell International over the next two years.

Hedge Fund Heavyweight

Now, let’s get to know the giants behind the push. Elliott Investment Management manages around $69.7 billion in assets. That makes them the third-largest hedge fund in the U.S. and the seventh-largest worldwide! Their reputation as an activist investor is well established, having successfully spurred change in key players like Evergy Inc. and Southwest Airlines in recent years.

Looking Ahead

So, what will happen next? For now, Honeywell representatives have been tight-lipped, but the upcoming weeks could shed light on the potential impact of Elliott’s bold moves. As this situation unfolds, one thing is clear: Kansas City is in for a shake-up that could alter the business landscape in big ways.

Stay tuned! There’s no telling what this activist investor will pull off next, especially with so many jobs and the future of the local economy at stake.