A. O. Smith Reaches Definitive Agreement to Sell 81% Stake in China Business to CPE

Global water technology company A. O. Smith Corporation has announced definitive agreements under which alternative asset manager CPE will acquire an 81% interest in A. O. Smith's China business. Following the transaction, A. O. Smith will retain a 19% stake and enter into a long-term brand licensing agreement to participate in the unit's future growth.

Transaction Details and Financials

• Valuation: The deal values the China business at approximately $400 million on a cash-free, debt-free basis, excluding the long-term brand licensing royalty stream.
• Total Expected Value: Including the net present value of ongoing licensing economics over multiple decades, total value is expected to exceed $500 million.
• Cash Repatriation: The transaction structure enables A. O. Smith to repatriate approximately $80 million in cash currently held in China.
• Capital Allocation: The company intends to prioritize share repurchases using after-tax proceeds and repatriated cash after the deal closes.

Strategic Rationale and Leadership Comments

According to the announcement, the agreements follow a strategic alternative review launched in July 2025. Steve Shafer, A. O. Smith chairman and chief executive officer, stated that the move positions the China business for continued growth under experienced local ownership while allowing A. O. Smith to focus resources on high-return opportunities.

Liuwei Qin, Managing Director of CPE, highlighted the firm's intent to support the next phase of product innovation, service capabilities, and customer relationships for the business.

Timeline and Verification

The transaction is expected to close in the first half of 2027, pending regulatory approvals and customary closing conditions. Additional details and original announcements can be verified through A. O. Smith's official investor relations website and SEC filings.