Testing the Limits of Industrial Spinoffs
Breakups can be rough on the businesses that get the boot. Plus, more industrial insights.
Honeywell has outperformed after two spinoffs, but the businesses it shed are under pressure.
Photographer: Michael Nagle/Bloomberg
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There have been an unprecedented number of industrial breakups in the past decade. It seems nary a conglomerate has made it through without some sort of major spinoff or asset sale — so much so, that I’ve often wondered whether this craze is going too far. Could it be these companies are simply out of better ideas, and might they miss the diversity they’re so aggressively trying to jettison whenever we do see another downturn? Maybe it’s not the parent companies we should be most worried about, though, but rather their corporate castoffs. Which brings me to Garrett Motion Inc. The maker of turbochargers was spun off from Honeywell International Inc. last year and this week sued its former parent over what it alleges is an “oppressive and unconscionable” indemnification agreement for legacy asbestos liabilities.