Honeywell (HON.US) is under pressure from activist investors to announce a spinoff plan by early February.

According to media reports, Honeywell (HON.US) is preparing to spin off under pressure from activist investor Elliott Management, and the company may announce its plan to spin off at the same time as its fourth-quarter 2024 earnings in early February. The company is reportedly planning to split into two independent public companies, one focused on automation and the other on aerospace and defense.

Elliott Management, which holds more than $5 billion worth of Honeywell shares, has pushed the industrial conglomerate to split into two companies, according to the reports. Elliott believes Honeywell should be split along its two main business lines — its aerospace business, which provides engines and avionics for military and commercial customers, and its automation business, which provides sensors and control systems for industrial users.

Jesse Cohn and Marc Steinberg, partners at Elliott Management, said in a previous statement: "The corporate structure that once fit Honeywell no longer does." Elliott believes splitting Honeywell into two companies could unlock as much as 75% upside over the next two years.

Jesse Cohn and Marc Steinberg noted that in the past, Honeywell's carefully assembled businesses helped drive "sustained" margin improvement. But since 2019, Honeywell has lagged its industrial peers, and the two blamed the company's messy corporate structure, challenged portfolio and poor investor communication.

It's worth noting that Honeywell said last month that it is exploring spinning off its aerospace business as part of a broader review of its operations. The company said at the time that the board had made significant progress and that it planned to provide an update when it reports fourth-quarter earnings.

Wall Street analysts said Honeywell's spinoff could unlock significant upside. Barclays estimated that the total value of Honeywell's assets, based on free cash flow expectations, was about $270 per share. Jefferies said the value of Honeywell's aerospace business alone could be more than $90 billion.