For decades, Honeywell International (HON) carried a weight it could never quite shrug off: asbestos liabilities linked to its Bendix automotive brakes business, a relic of the mid-20th century that clung to its balance sheet well into the 21st. That baggage—expensive, unpredictable, and endlessly distracting—has finally been lifted after HON agreed to offload all future liability to a third party.
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In the 1980s and 1990s, Honeywell settled more than 50,000 cases at a reported average of ~$1,000 per case. For years, the company has maintained that 74% of all submissions were “dismissed without merit” and were effectively spurious. Of the 119 cases that reached a U.S. court, Honeywell’s lawyers won 116 of them. Since then, the hits have kept coming, and Honeywell has been settling.
In 2019, a California judge awarded $4.4 million to the family of a bowling alley owner in a mesothelioma claim involving bowling balls that used Honeywell’s materials. Other cases included a $5.8 million payout in 2017 and a $18.5 million settlement in 2019 to the family of a man who died from cancer, having worked at a brake shop in Little Rock in the 1970s.
More recently, in its Q1 2025 report, Honeywell allocated $60 million in asbestos liability payments related to Bendix, following a $55 million sum the previous quarter. At that cadence, HON was earmarking ~$233 million annually, until yesterday’s deal with Delticus.
Delticus Swoops in to Alleviate Honeywell
Yesterday, Honeywell announced the divestiture of all its Bendix asbestos liabilities to Delticus, a “corporate liability acquisition platform”. Together, the two contributed $1.68 billion in cash and insurance assets into a structure where Delticus assumes full responsibility for every current and future asbestos claim. For Honeywell, the transaction means a sigh of sentimental relief—no more exposure, no lingering shadows, and no more of what executives often described as a “non-core distraction.”
To fund its side of the deal, Honeywell tapped part of the $1.6 billion windfall it received earlier this year from unwinding its indemnification obligations to Resideo. The news also helps explain the sharp rise in Honeywell’s total debt over the past year.
According to SEC filings, the firm typically borrows ~$20 billion annually, but chose to tap $31 billion in 2024, partly to fund acquisitions such as CAES, LNG, and Civitanavi Systems, and also to bolster the buffer for its asbestos tab. With a line now drawn, Honeywell can now focus on “portfolio optimization and simplification.”
The timing is understandably telling, and Honeywell’s PR team knows all about it. For those without a stock split calendar, Honeywell is preparing to split into three independent companies by late 2026, and clearing its plate of legacy obligations is critical to presenting each new entity as clean, focused, and investor-ready.
Honeywell management has specified that it will split its automation and aerospace technologies divisions, combined with a spinoff of its advanced materials unit. The final result is that all three companies will operate independently, with the investor boon being that the split will be tax-free for HON shareholders.
Honeywell Pays Once to Free Up Years of Cash Flow
Honeywell’s asbestos liabilities didn’t make headlines quarter after quarter. Still, they were a constant drain—both in terms of sentiment and cash flow. Honeywell estimates the divestiture will improve annual free cash flow by more than $100 million in the near term. The tradeoff is a one-time after-tax charge of $115 million, which the company will exclude from adjusted earnings — another boon for investors.
Markets won’t blink at the accounting loss, but shareholders will notice the symbolic lift. On Wall Street, the analyst consensus is mildly bullish, with the average price target currently at $251.55 per share as the stock trades at ~$210.
Indeed, HON stock has sagged in 2025, down 12% over the past three months and 5.5% year-to-date. Against that backdrop, moves that simplify the story and sharpen the investment case carry extra weight.
Order Backlog Soars as Honeywell Navigates Margin Pressures
The asbestos chapter closes just as Honeywell is enjoying momentum elsewhere. The company’s record $36.6 billion order backlog—up 10% year-on-year—shows demand across aerospace, defense, and industrial solutions remains strong. Second-quarter sales grew 5% organically, with Defense & Space and UOP notching double-digit gains. That strength led management to raise full-year guidance, now calling for 4% to 5% organic sales growth in 2025.
It may not all be plain sailing for the manufacturing titan. Aerospace margins have compressed by 170 basis points to 25.5% as inflation and integration costs bite, while industrial automation growth has waned. Meanwhile, acquisitions such as Johnson Matthey’s Catalyst Technologies and Li-ion Tamer are aimed at reinforcing Honeywell’s positioning in the energy transition and building automation—two of its declared megatrends, alongside aviation and automation.
A Cleaner Slate Beckons for Honeywell
In many ways, Honeywell’s asbestos exit is less about the dollars and more about the optics. The company is tidying up before its high-profile split, reassuring shareholders that it’s willing to pay now to eliminate distractions later.
For a $130 billion capped company generating nearly $40 billion in revenue, a $1.68 billion hit won’t move the needle financially—but the lift in sentiment is worth every penny. Shareholders have long valued Honeywell’s discipline in portfolio management—selling off what no longer fits and doubling down where and when it matters. Removing asbestos from the narrative is one more signal that Honeywell is determined to look forward, not back. And for a company poised to reinvent itself by next year, that kind of clarity is priceless.