Honeywell (HON +2.4%) opens at an all-time high before easing off a bit, after Third Point disclosed in a letter to shareholders late yesterday that it had taken a stake in the company and was pushing for it to spin off its aerospace unit.
“Aerospace’s presence in the portfolio is the chief cause of Honeywell’s discounted valuation,” Third Point says; HON says only that it will give the suggestion a "comprehensive, informed and objective review."
Third Point owned 1.4M HON shares as of Dec. 31, but the fund has substantially increased its position and it is now a top-five holding, CNBC reports, citing a person familiar with the fund.
The proposal sparks mixed reaction among analysts; Citi says HON does not need to break up to create value, while J.P. Morgan says the proposal provides “food for thought” and deserves debate.
“We too like the themes that Third Point highlights, but Honeywell is on a path that could deliver 20% in a reasonable period of time without the distraction of a spin,” says Jefferies analyst Howard Rubel.
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