Bank of Montreal's investment banking unit is spearheading a US$1.8 billion debt deal to finance the sale of Honeywell International Inc.'s productivity solutions and services business to industrial manufacturer Brady Corp.
Debt Structure and Syndication
BMO Capital Markets will syndicate a US$1 billion term loan to other Wall Street lenders, according to sources familiar with the matter. The bank is also considering selling an US$800 million tranche of debt to investors in either the investment-grade bond or private-placement markets, the sources said, requesting anonymity as the details are confidential.
The Canadian lender initially underwrote the transaction with a US$1.8 billion bridge loan, as disclosed in a securities filing from Brady.
Growing Trend of Private Placements
If Brady opts for a private placement, it will join a rising number of companies using this method to sidestep volatile public bond markets. Recently, fast-food chain Chick-fil-A Inc. and data giant Oracle Corp. sold private bonds, according to Bloomberg reporting.
Private placements source funding directly from institutional investors, such as life insurers, and bypass the regulatory securities filings required in public deals. This approach helps borrowers maintain a lower profile and often accelerates the funding process.
Honeywell's Portfolio Restructuring
Honeywell's productivity solutions and services business, known as PSS, supplies mobile computers, barcode scanners, and printing solutions for the logistics market. It generated approximately US$1.1 billion in revenue in 2025. Brady agreed to acquire the business for US$1.4 billion earlier this month.
Within two years of the deal's closing, Brady expects to achieve a leverage ratio of less than two times net debt to EBITDA.
This sale marks Honeywell's latest effort to reshape its portfolio as it pursues a multi-part breakup. In July, the manufacturing conglomerate announced it was evaluating strategic alternatives for two businesses, including PSS.
