Resideo to pay $1.59 billion to Honeywell, ending future obligations

NEW YORK - Resideo Technologies, Inc. (NYSE:REZI) announced Wednesday it has entered into an agreement with Honeywell International Inc. (NASDAQ:HON), a prominent $140.77 billion industrial conglomerate, to eliminate all future monetary obligations under their 2018 Indemnification and Reimbursement Agreement with a one-time payment of $1.59 billion. According to InvestingPro data, Honeywell’s current market position appears fairly valued, with the stock trading at $221.72.

The payment, scheduled for the third quarter of 2025, will terminate Resideo’s obligation to make annual payments to Honeywell of up to $140 million through 2043. The company made its regularly scheduled third quarter payment of $35 million on Tuesday. Honeywell, which maintains a strong financial position with $9.96 billion in EBITDA for the last twelve months, has demonstrated consistent shareholder returns with 41 consecutive years of dividend payments.

The agreement will remove all affirmative and negative covenants contained in the original indemnification agreement while maintaining Resideo’s long-term license to use the Honeywell Home brand.

Resideo plans to finance the payment through approximately $400 million in cash on hand and new senior secured debt financing committed by J.P. Morgan and Wells Fargo.

In a separate announcement, Resideo revealed plans to spin off its ADI Global Distribution business as a tax-free transaction to shareholders, creating two independent public companies.

The company also indicated it expects to exceed its previously provided second-quarter 2025 financial outlook for revenue, adjusted EBITDA, and adjusted earnings per share. Resideo reported it anticipates having approximately $750 million in total cash as of June 28. For deeper insights into both companies’ financial health and growth potential, InvestingPro subscribers can access comprehensive Pro Research Reports, which transform complex Wall Street data into actionable intelligence for smarter investing decisions.

"This agreement with Honeywell marks a significant turning point for Resideo and exemplifies the constructive relationship we have forged with Honeywell," said Jay Geldmacher, Resideo’s President and CEO, in the press release statement.

Resideo, a manufacturer and distributor of sensing and controls products for residential and commercial markets, was spun off from Honeywell in 2018. The company will release its complete second quarter 2025 financial results on August 5.

In other recent news, Honeywell International reported its second-quarter 2025 earnings, surpassing analyst expectations. The company achieved adjusted earnings per share of $2.75, exceeding the forecasted $2.66, which marks a 3.38% surprise. Revenue also outperformed predictions, reaching $10.4 billion compared to the anticipated $10.05 billion. Following these results, JPMorgan raised its price target for Honeywell to $222 from $217, while maintaining a Neutral rating. JPMorgan noted that Honeywell’s strong quarterly performance allowed the company to meaningfully raise its guidance. Despite the positive earnings and revenue figures, Honeywell’s stock experienced a decline in pre-market trading, attributed to broader market uncertainty. These developments provide insight into Honeywell’s current financial standing and investor sentiment.

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