Honeywell Exits Asbestos Liabilities In $1.68 Billion Deal

This article first appeared on GuruFocus.

Honeywell (NASDAQ:HON) is asbestos liabilities. The company said Wednesday it has handed off all of its remaining Bendix asbestos obligations plus other related claims to Delticus, a liability acquisition platform backed by institutional investors.

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As part of the deal, Honeywell and Delticus contributed about $1.68 billion in cash and insurance assets into a new structure. From here, Delticus will manage and resolve every current and future claim, while Honeywell is permanently indemnified. In other words, the company is done with asbestos for good.

Honeywell used some of the $1.6 billion it recently got from unwinding an agreement with Resideo to help fund the transfer. Management framed the move as another step in reshaping the business, especially as it prepares to separate into three standalone companies by 2026.

There's a one-time after-tax hit of about $115 million, but going forward Honeywell expects the cleanup to free up more than $100 million in annual cash flow for several years. That gives the company more flexibility to invest in its growth priorities.

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