A. O. Smith deal values China business above $500 million
Key points
- A. O. Smith (NYSE:AOS) signed agreements for CPE to acquire an 81% interest in its China business, valuing the business at approximately $400 million before licensing royalties.
- Including the estimated present value of long-term brand licensing payments, A. O. Smith expects total transaction value to exceed $500 million.
- A. O. Smith intends to prioritize share buybacks using after-tax proceeds and approximately $80 million in cash held in China, with closing expected in the first half of 2027.
A. O. Smith (NYSE:AOS) signed definitive agreements for CPE to acquire an 81% interest in its China business in a transaction valued at approximately $400 million, excluding licensing royalties.
The company will retain a 19% stake and receive ongoing royalties under a long-term brand license, with total expected value exceeding $500 million when estimated future licensing payments are included.
The deal structure will allow A. O. Smith to repatriate approximately $80 million held in China, and the company intends to prioritize share repurchases using after-tax transaction proceeds and the repatriated cash.
The company expects the transaction to close in the first half of 2027, following a review of strategic alternatives for its China business announced in July 2025.
After closing, A. O. Smith will retain a minority ownership interest and brand licensing income from the China business, while the planned share repurchases will depend on the availability of proceeds and completion of the transaction.
