Resideo Technologies, Inc. announced its intention to separate its ADI Global Distribution business through a tax-free spin-off to shareholders, expected to be completed in the second half of 2026. This separation aims to create two independent public companies with distinct investment profiles, allowing each to pursue focused growth strategies. The remaining Resideo will concentrate on residential controls and sensing solutions.
Concurrently, Resideo entered into a definitive agreement with Honeywell International Inc. to terminate the Indemnification and Reimbursement Agreement. This will involve a one-time cash payment of $1.59 billion to Honeywell in the third quarter of 2025, eliminating annual payments of up to $140 million through 2043 and all associated covenants. This termination is expected to be immediately accretive to Resideo's adjusted earnings per share and free cash flow.
The $1.59 billion payment to Honeywell will be financed through approximately $400 million of cash-on-hand and new senior secured debt financing committed by J.P. Morgan and Wells Fargo. These strategic actions are anticipated to significantly enhance Resideo's strategic and financial flexibility, providing clarity for investors by removing a long-standing structural overhang.
For the twelve-month period ended March 29, 2025, the Products & Solutions segment delivered net revenue of $2.6 billion and an adjusted EBITDA margin of 24.2%, while the ADI segment delivered net revenue of $4.5 billion and an adjusted EBITDA margin of 7.5%. Resideo also expects its second quarter 2025 financial results to be above the high-end of its previously provided outlook range for net revenue, Adjusted EBITDA, and Adjusted EPS.
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