Stephen Pope

Honeywell’s $10 billion aerospace division plans to expand its holdings over the next several quarters through a series of targeted acquisitions in the U.S. and abroad, according to Bob Johnson, president and CEO of Phoenix-based Honeywell Aerospace.
Those who have followed Honeywell since its 1999 merger with AlliedSignal will recall that Johnson outlined a similar strategy last summer, only to see the company’s acquisition plans put on hold in the wake of General Electric’s bid to buy Honeywell for $45 billion last October. For the decision-makers within Honeywell who for nine months watched from the sidelines as GE battled European regulators in an unsuccessful attempt to buy the company, however, not only does life go on after that failed merger, in many ways it’s as though the company has shed a set of cumbersome shackles. 
During the merger process, which started last October and didn’t end until August 2, Honeywell was prevented from making acquisitions or divestitures without first gaining permission from GE. In addition, it was unable to move ahead with a number of planned business partnerships and was not allowed to hire new employees unless GE consented. As a result, a forced leaning of Honeywell’s workforce occurred as about 1,500 employees left the company and were not replaced.
Such restrictions can hamstring a company struggling to remain dominant in competitive markets, especially a business on the cusp of making several key acquisitions while also experiencing a slide in its stock price, as was the case at Honeywell last fall.
Johnson, however, insisted the aerospace division is better positioned now than at any time in the past two years. In the wake of the abortive merger, Johnson said he and his management team are picking up where they left off last year before GE made its play to purchase the $24 billion company. The strategy, said Johnson, includes few, if any, divestitures and a hiring freeze that will continue until key acquisitions are completed.
Asked about the mood within Honeywell following the merger’s collapse, Johnson conceded that from management’s perspective the process was a disruption, but he also pointed to a number of the positive aspects of the brief GE-Honeywell link. 
“On the one hand it was a slight disappointment, especially for the people directly involved in trying to put the merger together,” Johnson said. “On the other hand it’s a big sigh of relief. My management team and I are happy. We did not want to make the divestitures that the Europeans were calling for. It turned out to be a matter of putting the two companies together and then tearing them apart.
&nbsp;“Frankly, we’re glad to have our company back,” said Johnson. “GE is a fine company and we were able to come away with a lot from our experiences dealing with them. In some ways it was like a nine-month consulting process. Still, the energy we spent on the integration process [between GE and Honeywell] can now be applied to [expanding] our businesses.” Johnson recalled how Honeywell had been piecing together a handful of acquisitions when GE offered to buy the company, something that immediately put the brakes on those deals. A year later Honeywell is reevaluating the markets in which it does business, as well as the company’s position in those markets. Its goal is to target acquisitions that would fit best in the Honeywell pie today. 
Most expansion within the aerospace division over the next year or two is expected through acquisitions, with growth otherwise remaining relatively flat, Johnson said. Economic down cycles, he noted, tend to affect the aerospace segment later than other industries. In the same way, aerospace often pulls out of downturns after the rest of a slumping economy is back on its feet. 
Unfortunately for Honeywell, its stock price started to falter earlier than most others. This made the company an attractive acquisition target itself, which it became in May last year when United Technologies began talks with then-Honeywell CEO Michael Bonsignore about a possible merger. When news of the planned deal surfaced last October, GE swooped in with a counter offer and UTC reluctantly walked away from the table.
With both unsuccessful mergers behind it, Johnson stressed Honeywell is not–nor was it ever–for sale. “Clearly the company does not have a for-sale sign on it,” he said. “We are thrilled with our position and are looking forward to benefiting from the positive energy of having our company back and continuing with big plans going to market.”
Big plans mean continued flight testing of the Primus Epic avionics suite, which is now getting workouts aboard the Raytheon Hawker Horizon, Bell/Agusta AB139 medium-twin helicopter and Gulfstream’s upgraded GV-SP. Johnson said he is also bullish about the prospects for Honeywell’s developmental Apex glass cockpit for lightplanes, as well as the AS900 engine line and TFE731 turbofan retrofit programs.
Through all the problems that have beset Honeywell in the last 18 months–the slumping stock price, the failed GE merger and the resignation of CEO Bonsignore–the aerospace division has been a beacon, continuing to meet its revenue targets, moving ahead with avionics and engine programs and staying focused on its customers. 
“Lawrence Bossidy calls it the jewel of the company,” said Johnson, referring to praise for the aerospace division doled out by the Morristown, N.J.-based company’s new chairman and CEO. Bossidy relinquished control of the company in April last year, shortly after completion of the Honeywell-AlliedSignal merger, only to come out of retirement to put the company back on track. 
In a recent visit to Phoenix, Bossidy met with the aerospace leadership team and, in Johnson’s words, was “terribly upbeat and very encouraging and complimentary” of the division’s past, present and hoped-for future successes.

Honeywell charts aggressive acquisition spree

Honeywell’s $10 billion aerospace division plans to expand its holdings over the next several quarters through a series of targeted acquisitions in the U.S

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