Federal-Mogul Corporation is poised to purchase the Bendix friction materials business from Honeywell.
Information from Federal-Mogul, which already supplies several brands of brake friction to the OE and aftermarket levels including Wagner and Ferodo, says that the company has entered into a letter of intent to acquire the Bendix friction materials business.
Consummation of the acquisition will be conditional upon Honeywell receiving a bankruptcy court-issued permanent injunction shielding it from all current and future asbestos liabilities related to Honeywell’s worldwide friction materials business.
Federal-Mogul is poised to emerge from its current voluntary bankruptcy protection filing to protect it from those ballooning liability cases and obviously does not to reignite a firestorm of liability claims.
Hence the completion of the acquisition is subject to Bankruptcy Court approval and customary conditions, including obtaining any governmental approvals, and will occur after Federal-Mogul emerges from Chapter 11. Federal-Mogul, its United States subsidiaries, and certain of its United Kingdom subsidiaries voluntarily filed for financial restructuring under Chapter 11 of the U.S. Bankruptcy Code in October 2001.
“This acquisition represents a unique way, given our Chapter 11 status, to grow our core product base and position Federal-Mogul to emerge from its bankruptcy proceedings a stronger company,” says Federal-Mogul chairman and chief executive officer Frank Macher.
Under terms of the transaction, Federal-Mogul would acquire Bendix’s worldwide friction materials business, with the exception of certain U.S.- based assets, subject to certain liabilities.
For up to two years following the closing, Honeywell will continue to operate certain of its U.S.-based plants to manufacture friction materials on a contract basis for Federal- Mogul. Federal-Mogul will obtain the rights to the Bendix and Jurid brand names for friction products.
Honeywell would retain the right to use the Bendix brand name in its aerospace business.
The Bendix friction materials business is a part of Honeywell’s Transportation & Power Systems group, which is a separate business from the Honeywell Consumer Products Group which markets the Prestone, Autolite, and Fram brands.
Have your say: