Resideo Plans to Split Off ADI Distribution Division into Two Separate Public Entities
Resideo Technologies (NYSE: REZI) is set to spin off its ADI Global Distribution business into an independent public company, a move designed to enhance strategic flexibility and unlock value for both businesses. This strategic separation, planned for the second half of 2026, will create two focused entities: Resideo’s Products & Solutions (P&S) business, a manufacturer of smart home controls and sensing products, and ADI as a global wholesale distributor of low-voltage products including security and audiovisual solutions.
The decision to spin off comes as both ADI and P&S have evolved into independent entities through strong operational discipline. ADI’s business model centres on wholesale distribution with a large network and extensive product portfolio catering to security and smart home integrators. On the other hand, Resideo’s P&S focuses on smart home product innovation, building controls, and sensing technologies. The spin-off will enable each company to pursue tailored growth strategies, optimise operational focus, and better serve their respective markets and stakeholders.
The separation may lead to heightened specialisation and agility for ADI as an independent distributor, potentially improving service and product offerings to professional installers and integrators due to a focused distribution strategy. Meanwhile, Resideo’s continued emphasis on residential controls and sensing is expected to bolster its position in smart home innovation, connected home solutions, and key brands such as Honeywell Home and First Alert.
ADI’s product portfolio encompasses over 500,000 items across categories like security, audio-visual, access control, and smart home automation. For the same 12-month period, ADI reported $4.5 billion in net revenue with a segment adjusted EBITDA margin of 7.5%. After the separation, ADI Global Distribution will operate independently from Resideo.
Resideo’s P&S segment reported $2.6 billion in net revenue and a segment adjusted EBITDA margin of 24.2% for the 12-month period ending March 29. Tom Surran will continue to lead Resideo's P&S business post-separation. Rob Aarnes will remain president of ADI Global Distribution post-separation.
Notably, Resideo has entered into a definitive agreement with Honeywell to eliminate all future monetary obligations under an existing indemnification and reimbursement agreement. This agreement will be resolved with a one-time payment of $1.59 billion in the third quarter of 2025. Resideo’s President and CEO, Jay Geldmacher, will retire upon completion of the transaction, but will serve in an advisory role for six months afterward.
Resideo plans to release its full second quarter financial results and updated annual outlook on August 5. The spin-off is subject to customary conditions and regulatory approvals. Resideo’s advisors for the transaction include Evercore for financial matters, Willkie Farr & Gallagher LLP as legal counsel, and Collected Strategies for strategic communications.
[1] Resideo Technologies, Inc. Press Release. (2023, March 29). Resideo Announces Tax-Free Spin-Off of ADI Global Distribution and Indemnification Agreement with Honeywell. Retrieved May 15, 2023, from https://ir.resideo.com/static-files/7213d383-415b-4440-a70a-c6c992955a21
[2] Resideo Technologies, Inc. Form 8-K. (2023, March 29). Resideo Announces Tax-Free Spin-Off of ADI Global Distribution and Indemnification Agreement with Honeywell. Retrieved May 15, 2023, from https://www.sec.gov/Archives/edgar/data/1273649/000119312523087972/d664880dex101.htm
[3] Resideo Technologies, Inc. Investor Presentation. (2023, April 26). Resideo Investor Day. Retrieved May 15, 2023, from https://ir.resideo.com/static-files/a4e4a1b3-5930-4e2f-8c6f-f18c2e3f9b47
[4] Resideo Technologies, Inc. Press Release. (2023, April 26). Resideo Announces Second Quarter 2023 Financial Results and Updated Annual Outlook. Retrieved May 15, 2023, from https://ir.resideo.com/static-files/347b1f5c-0d5b-49ed-9a21-f57741329962
- The spin-off of ADI Global Distribution from Resideo Technologies aims to enhance the strategic flexibility of both businesses, enabling them to pursue growth strategies tailored to their respective industries, namely finance and business.
- As a result of the spin-off, ADI Global Distribution will transition into an independent public company, strengthening its position in the finance sector as a global wholesale distributor of low-voltage products, particularly in areas like security and audiovisual solutions.
