A. O. Smith has entered into agreements with CPE under which the alternative asset manager will acquire an 81% interest in A. O. Smith’s China business at an approximately $400 million valuation.
A. O. Smith will retain a 19% ownership interest and enter into a long-term licensing agreement covering the A. O. Smith brand in China.
Including the net present value of the expected multi-decade licensing royalty stream, the total value associated with the transaction is expected to exceed $500 million.
The structure will also allow A. O. Smith to repatriate approximately $80 million in cash currently held in China.
A. O. Smith intends to prioritize share repurchases using the after-tax transaction proceeds and repatriated cash following closing.
The deal follows a strategic review of the China business launched in July 2025. A. O. Smith’s board concluded that a transaction with CPE would provide the best path for the business while allowing the company to concentrate capital on higher-return opportunities.
CPE will acquire its stake in A. O. Smith China Investment Co., the holding company for the company’s China operations.
A. O. Smith will remain involved as both a minority shareholder and brand licensor, with the companies planning to cooperate on product innovation, service quality, and branding.
CPE has investment experience across advanced manufacturing, AI, consumer, healthcare, and infrastructure and has previously partnered with multinational businesses operating in China.
The transaction is expected to close during the first half of 2027, subject to regulatory approvals and customary closing conditions.
Goldman Sachs served as financial advisor to A. O. Smith, while Latham & Watkins provided legal counsel.
KEY QUOTES:
“We believe this transaction positions the China business for continued growth under experienced local ownership, while enabling A. O. Smith to focus resources on our highest-return opportunities and drive sustainable value creation.”
Steve Shafer, Chairman And CEO Of A. O. Smith
“A. O. Smith has built a trusted, premium brand and a strong business in China over more than three decades. We are excited and proud to invest in A. O. Smith’s China business and look forward to supporting its next phase of growth through continued investment in its product innovation, service capabilities and customer relationships.”
Liuwei Qin, Managing Director Of CPE
