(Reuters) - U.S. industrial conglomerate Honeywell International Inc (HON.N) announced plans to increase its annual divided by 12 percent on Friday as it resists pressure from investors to part with its aerospace unit.
Sources told Reuters the company was now not planning to spin off its largest single business and would sell only some limited assets, potentially including its production of turbochargers for cars.
Activist investor Daniel Loeb and his hedge fund Third Point LLC have argued Honeywell is undervalued compared to peers in industrial automation and that spinning off all of the aerospace business would create $20 billion in shareholder value.
Honeywell, whose shares were little changed in morning trading, said in a statement it was increasing its regular cash dividend to $2.98 per common share, from $2.66 per common share, as of the fourth quarter but declined to comment further on any plans to sell assets.
The company publishes third quarter results in mid-October.
The aerospace business, Honeywell’s biggest, makes turbochargers for cars as well as auxiliary power units and engines for aircraft made by Bombardier Inc (BBDb.TO), Textron Inc (TXT.N) and General Dynamics Corp (GD.N), among other products.
Third Point has argued that weak sales for the segment as a whole are a drag on the company’s valuation.
Up to Thursday's close, Honeywell's stock had risen about 21.4 percent this year, outperforming the 12.1 percent increase in the S&P 500 index .SPX.
Reporting by Ankit Ajmera in Bengaluru and Greg Roumeliotis in New York; editing by Patrick Graham