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Honeywell to sell unit
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August 24, 2000: 6:16 p.m. ET
Diversified manufacturer retains Salomon Smith Barney to look for buyer of CPG unit
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NEW YORK (CNNfn) - Honeywell disclosed plans Thursday to sell its consumer products group, as part of a previously announced strategy to focus on its core aerospace and industrial businesses.
The consumer products business includes such 60-year-old brands as Prestone, best known as a leading antifreeze/coolant in the United States, and Autolite, a producer of spark plugs. Other brands include FRAM and Holts.
Honeywell retained Salomon Smith Barney to help it find a buyer for the Danbury, Conn.-based business unit that generated $1.1 billion in 1999 net sales and employs about 4,400 people.
 Morris Township, N.J.-based Honeywell, a Dow Jones industrials component, is shopping the business to a buyer that wants to invest in the consumable automotive aftermarket.
"This transaction will enable CPG's great brands to work for a buyer who is eager to invest or expand in the huge consumable automotive aftermarket," said David E. Berges, president of Honeywell's consumer products group.
On July 18, Honeywell met lowered second-quarter expectations. The diversified manufacturer earned $605 million, or 75 cents a diluted share, excluding special charges, in line with the forecasts of analysts surveyed by First Call. However, the company issued lower guidance for the remainder of this year and next year.
On July 10, Honeywell announced a sweeping program to trim $100 million in expenses by eliminating 6,000 jobs, roughly 5 percent of its work force, and selling or closing "non-core" units.
Meeting expectations
Honeywell is selling the CPG unit to boost its lagging stock price and meet earnings expectations of 76 a diluted share for the third quarter, said analyst Nicholas Heymann of Prudential Securities.
Honeywell will gain about $3 billion in net proceeds from selling its non-core businesses in first quarter 2001, Heymann estimated.
First off, Honeywell will get $1 billion from cutting its working capital. The diversified manufacturer also plans on selling its CPG unit, as well as its friction materials and pharmaceutical fine chemicals businesses, Heymann said. The company will incur pre-tax charges associated with these portfolio changes of $300 million-to-$350 million in the third quarter.
The company may also sell its performance polymers and chemicals unit, Heymann said.
"They last thing they are going to do is reduce leverage and buy back shares," Heymann said. "This is all good news. Their stock's been down."
Honeywell rose 1-7/8 to close at 40 Thursday. 
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Honeywell
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