WASHINGTON (dpa-AFX) - A. O. Smith Corporation (AOS), a global water technology company, announced agreements to sell an 81% stake in its China business to alternative asset manager CPE, while retaining a 19% interest and securing long-term brand licensing royalties.
The transaction values the China business at approximately $400 million on a cash-free, debt-free basis. Including the net present value of licensing royalties, the total value is expected to be more than $500 million.
The deal will also enable A. O. Smith to repatriate approximately $80 million in cash currently held in China. The company intends to use the proceeds and repatriated cash for share repurchases.
The deal is expected to close in the first half of 2027.
A. O. Smith said the transaction would allow it to focus its portfolio while retaining an opportunity to benefit from the business's future growth. It will continue to work with CPE on branding, product innovation and service quality, supporting customers and distributors.
The company is scheduled to release its third-quarter financial results on October 29.
On the NYSE on Tuesday, A. O. Smith shares rose 0.24% before closing at $62.06.
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