Honeywell to spin off chemicals business; new name will be AdvanSix

US-headquartered diversified technology firm Honeywell International is to spin off its US$1.3 billion resins and chemicals business into a stand-alone, public-listed company known as AdvanSix. The deal is expected to be completed by early 2017 and is subject to certain conditions and the assurance that the spinoff will be tax-free to Honeywell shareowners.

The move to spin off the assets comes after the company withdrew a US$90 billion bid to buy compatriot firm, United Technologies Corp., in March, after facing opposition from antitrust regulators and major customers and also due to the “unwillingness of United Technologies to engage in negotiations.”

“Our $1.3 billion resins and chemicals business enjoys a leading position in the industries it serves and a global cost advantage. It is favourably positioned to continue to achieve global growth as a standalone enterprise, with added flexibility to make capital investments that enhance its offerings and service to customers,” said Honeywell Chairman/CEO, Dave Cote.

“Following the spin-off, Honeywell and AdvanSix will each have a more focused business and be better positioned to invest more in growth opportunities and execute strategic plans best suited to its respective business. The transaction will create added value for our shareowners, who will receive AdvanSix shares tax-free in addition to the Honeywell shares they already own.”

The resins and chemicals business makes nylon 6 resin used to produce engineered plastics, fibres, filaments, and films that, in turn, are used in end products such as automotive and electronic components, carpets, sports apparel, fishing nets, and food and industrial packaging. AdvanSix also produces Sulf-N ammonium sulphate fertilisers and chemical intermediates, including phenol, acetone, and Nadone cyclohexanone, and is the largest single-site producer of caprolactam, the feedstock for nylon 6.

In 2015, the resins and chemicals business had a net profit of US$68.1 million, with nylon 6 resin sales accounting for 24% of the company’s total turnover. It also expanded its plant in Chesterfield last year, adding on 40,000-tonne capacity for nylon resins, with a total capacity of 200,000 tonnes/year.

Cote went on to say the spin-off is “the evolution of the Honeywell portfolio” and that the firm continues to focus on driving breakthrough growth through advanced software capabilities and technology differentiation, with high-value product offerings. “We have a well-balanced and successful capital deployment strategy, which includes acquisitions and divestitures, capital expenditures, dividends, and share repurchase, all of which drive additional value to our shareowners over the long-term,” he said.

Erin Kane will serve as President/CEO of AdvanSix upon completion of the transaction. Kane currently serves as Vice-President/General Manager of the Resins and Chemicals business, a position she has held since October 2014. She joined Honeywell in 2002 and has held numerous marketing, management, and business director roles in Resins and Chemicals and other businesses within Honeywell. Prior to joining Honeywell, Kane held Six Sigma and process engineering positions at Elementis Specialties and Kvaerner Process.