Honeywell Ends Talks With Federal-Mogul

Motor, Mar 2004 by Nash, Tom

Honeywell had hoped to escape $2 billion of asbestos liabilities by selling its Bendix subsidiary to FederalMogul, but those discussions recently ended.

In an innovative deal announced last year, Bendix would have been given free of charge to FederalMogul, already in bankruptcy protection due in great part to asbestos claims, in exchange for the assumption of all liabilities.

According to the FmaMcmZ Times, the deal is thought to have broken down because Federal-Mogul creditors-mostly asbestos lawyers acting for other claimants-feared the ongoing business assets of Bendix were not valuable enough to compensate for the estimated $2 billion liability.

Late last year, Honeywell said it expected to make $110 million of asbestos-related payments during the fourth quarter, and made related payments of $467 million, including legal fees, in the first three quarters of 2003. The average indemnity cost per claim of the Bendix cases is about $2900.

According to Honeywell, the company now plans to hold on to Bendix rather than seek another buyer immediately.