Third Point LLC, which has disclosed a stake in Honeywell International Inc, said that the company should spin off its aerospace division in order to create over $20 billion in shareholder value.
The New York-based hedge fund, which owns 1.4 million shares of Honeywell, said in a letter to the company, ''Third Point believes that a separation of the Aerospace unit via a spin off transaction would result in a sustained increase in shareholder value in excess of $20 billion.''
''Spinning off Aerospace would transform Honeywell into an industrial growth company with a focus on automation and productivity,'' the letter added.
Reacting to the letter, Honeywell, which has market value of $100 billion, said it "strives to keep an open dialogue with all of its shareholders. We are focused on enhancing shareholder value and will continue to evaluate all ideas that have the potential to help us achieve this goal."
Honeywell's aerospace division's products like cockpit controls and jet engines are found on nearly every commercial, defense and space aircraft in service today.
It is its largest division in terms of revenues and generates 37.5 per cent of Honeywell's total annual sales of $39.3 billion.
But the US government defence budget cuts have taken a toll on its sales, which fell 3.2 per cent to $14.8 billion last year, while profit.