The September 2, 2015 issue of the Wall Street Journal features a front-page article on the success of Honeywell’s mergers and acquisitions strategy, which over the last 13 years has added more than $12 billion in annual sales through 84 acquisitions. Wall Street Journal reporter Tedd Mann showcases how Honeywell has bucked the current trend to split up conglomerates to focus on only the most promising lines of business by continuing to build its great positions in good industries. This strategy has been rewarded by investors with 194% growth in shareowner value since 2002, more than twice the increase of the S&P 500 over that same period.
In the interview, Honeywell Chairman and CEO Dave Cote said the real risk isn’t in having a diversified business, but in getting caught up in “fad-surfing”—trying to find new markets or business lines that don’t fit a company’s strengths or come at too high a cost. “I’ve always thought that was a great way to lose a lot of money,” he said.
Upon being named CEO, Cote instituted an aggressive strategy to align acquisitions with business lines closely to areas where the company was already operating, allowing Honeywell to build a leadership position in strong markets. Going forward, Honeywell has committed to $10 billion in acquisitions through the end of 2018. In late July, the company announced a $5.1 billion deal for Elster Group, a maker of gas, water and electricity meters to expand its business in the global gas industry.