Resideo Technologies has announced its intention to separate its ADI Global Distribution business through a tax-free spin-off to its shareholders.
Upon completion of the separation, Resideo’s Products & Solutions business (P&S) will continue to operate as Resideo while ADI will become its own independent public company.
Post-spinoff, Resideo says it will continue to operate as a building products manufacturer, remaining focused on residential controls and sensing solutions.
In a press release announcing the split, the company states it will be “well positioned” to further grow its current portfolio as a standalone entity.
As of now the company’s portfolio features products from brands such as Honeywell Home, First Alert, Braukmann and BRK.
ADI, meanwhile, will continue to operate as a low-voltage distributor serving both residential and commercial markets through its portfolio of over 500,000 professionally installed products.
Resideo, ADI Leadership Named as Geldmacher Steps Down
According to current acting CEO Jay Geldmacher, the company believes that the separation of the two entities is the “next, most natural step,” citing both segments’ strong operational discipline as having created a strong independence between the two that will allow them to stand on their own once separated.
In the 12-month period that ended March 29, the P&S segment delivered net revenue of $2.6 billion and a segment adjusted EBITDA margin of 24.2%. The ADI segment delivered net revenue of $4.5 billion and a segment adjusted EBITDA margin of 7.5%.
Following the separation of the two companies, Geldmacher confirms that ADI and P&S will continue to be led by Rob Aarnes and Tom Surran, respectively.
Geldmacher himself, who had previously announced retirement, will now finally be stepping down as CEO following the separation, though he won’t be entirely gone.
According to the company, Geldmacher will continue to serve in an advisory capacity for six months following the split.
Additional corporate governance details for Resideo and ADI will be disclosed in the coming months with all potential appointments being subject to Board approval.
Snap One and Its Products Likely to Go With ADI
Absent in the release is any direct mention of Snap One, which was bought out by Resideo in April 2024 and blended into the ADI business following the acquisition.
Prior to purchase, Snap One had benefited from multiple acquisitions of its own, including the control platform Control4 and Parasol. The subsequent buyout by Resideo has led to the formation of one of the largest distributors in the custom integration industry.
Following its acquisition, the duo of Snap One and ADI were often jointly referred to as ADI | Snap One in official materials. A special emphasis was also placed on the two operating as mostly independent entities while still sharing the same parent company, especially regarding interactions in the custom integration channel.
As of right now, it is uncertain how this relationship might change as ADI transitions into becoming its own, standalone public entity.
In the release, however, specific mentions of Snap One brands such as Control4, OvrC and Araknis Networks were mentioned as being under the ADI umbrella.
The implication is that these products will be moving with ADI following separation from Resideo, retaining ADI’s status as one of the largest distributors in the market as it continues to eye more growth through “selective M&A opportunities” akin to the purchasing of Snap One.
Resideo, ADI Separation Tells a Story of Scale
Post 2024, the custom integration landscape continues to show signs of heightened M&A activity by many of the industry’s top brands.
Speaking with industry veterans, the surge in activity paints an image of a maturing industry primed with continued growth potential, however, Resideo’s decision to spin off its ADI Global Distribution may point to a concern Matt Bernath of VITAL LLC, suggested in speaking with CE Pro in December 2024: scale.
Describing service as a core pillar of the custom integration industry, Bernath presented runaway scale, as has been seen in these acquisitions, as a threat to the “boutique, client-first experiences that custom integration excels at delivering.”
“The risk for large, consolidated entities is becoming too process-driven, losing the flexibility and responsiveness clients expect,” Bernath continues.
While Resideo and ADI both speak of continued growth, the sheer act of splitting the two divisions into standalone companies implies a conscious managing of scale while leaning into individual strengths.
In particular, two aspects of its business that ADI has long prided itself on has been service and customer relationships, two elements of business that Bernath says are vital to success in the CI space and where smaller entities can deliver in spades.
This story was original reported by our sister publication Commercial Integrator. It has since been update to better serve CE Pro’s audience.
