NEW YORK -- Honeywell International plans to spin off its turbocharger business into a new publicly listed company by the end of 2018, the industrial conglomerate confirmed Tuesday.
The company will also spin off its home and ADI global distribution business
Sources told Reuters on Monday Honeywell was planning to spin off noncore assets and create at least two new publicly listed companies as it seeks to streamline its business.
Honeywell expects the turbocharger business to employ 6,500 people and generate annual revenue of about $3 billion.
The reorganization will simplify Honeywell's wide-ranging portfolio, boost growth and give it more firepower to make acquisitions, Honeywell CEO Darius Adamczyk said on a conference call on Tuesday.
"We've got two exciting new businesses that we think can grow at an accelerated rate," Adamczyk said. "I'm very excited about M&A in all four of our (remaining) businesses. And I think these two spins ... give me a lot of different levers to invest our M&A dollars."
Adamczyk, like his peers at other industrial conglomerates, has been under pressure to pull apart a portfolio of disparate businesses that includes automotive turbo chargers, burglar alarms and the Xtratuf boots popular in Alaska’s fishing industry.
The company plans to retain its aerospace businesses -- a move that defies activist investor Third Point’s calls to spin off a division which accounted for about 36 percent of total revenue in 2016.
The spinoff of the low-margin automotive turbocharger business would follow moves by other large auto suppliers, such as Delphi Automotive, to shed technology tied to the internal combustion engine as regulators around the world crack down on emissions and talk of mandating a switch to battery-electric vehicles over the next two decades.
The new homes and global distribution business would provide services in home heating, ventilation and air conditioning (HVAC) controls and security markets, and would be a distributor of security and fire protection products.