11:25 AM EDT, 10/08/2024 (MT Newswires) -- Honeywell International ( HON ) announced plans on Tuesday to spin off its advanced materials business into a separate publicly traded company as it works to streamline focus around core business lines.

The advanced materials business that operates brands such as Solstice, Spectra, Hydranal and Aclar will be separated in a tax-free spin to shareholders. Honeywell ( HON ) expects the transaction to be completed by the end of 2025 or early 2026.

The new company will be a pure-play specialty chemicals and materials business that is expected to benefit from financial flexibility to pursue "growth opportunities through investment cycles," Honeywell ( HON ) said in a statement. Advanced materials has more than 4,000 patents, a large-scale manufacturing base and key positions in the transition to low-carbon solutions, according to a presentation.

"As a sector leader, this new company will have a greater strategic focus on innovation, enabling it to develop new, more sustainable solutions and products with next-generation chemistry to create further value for shareowners," Chief Executive Vimal Kapur said.

Honeywell ( HON ) estimates the business will generate roughly $3.8 billion in revenue in 2024. For 2023, advanced materials' revenue rose to $3.65 billion from $3.59 billion the year earlier. Its earnings before interest, taxes, depreciation and amortization margin is expected to be greater than 25% this year, according to management's forecast.

The spinoff will sharpen Honeywell's ( HON ) focus on automation, aviation and energy transition, the company said. Honeywell ( HON ) has completed a number of acquisitions over the past 12 months to support these areas, including Carrier Access Solutions, Civitanavi, CAES and Air Products and Chemicals' (APD) liquified natural gas business, it said.

The company is on pace to exceed its commitment to deploy at least $25 billion in capital expenditures, dividends, share purchases and accretive acquisitions through 2025, with $9 billion spent on acquisitions so far in 2024.

Honeywell's ( HON ) capital deployment cadence won't be impacted by the spinoff, according to the company's presentation. It has repurchased $1.2 billion in shares this year.

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