A. O. Smith to Sell 81% of China Business to CPE, Plans Buybacks With Proceeds

A. O. Smith agreed to sell a majority of its China business to investment firm CPE, ending a strategic review that began in July 2025 and freeing up cash the water heater maker says it plans to put toward share buybacks.

Under definitive agreements announced Tuesday and filed with an 8-K, CPE will acquire an 81% interest in A. O. Smith's China business, according to the company. A. O. Smith will keep a 19% stake and enter a long-term licensing agreement for its brand in China.

What the deal is worth

The transaction values the China business at about $400 million on a cash-free, debt-free basis, before counting the brand licensing royalties. Including the net present value of those royalties over what the company describes as a multi-decade period, A. O. Smith expects the total value to exceed $500 million.

The structure will also let the Milwaukee-based company repatriate about $80 million in cash currently held in China.

A. O. Smith said it intends to prioritize share repurchases as a use of the after-tax proceeds and the repatriated cash once the deal closes.

Why sell now

The board concluded that a transaction with CPE was the best path after evaluating a broad range of options, according to the release. Chairman and CEO Steve Shafer said the deal lets the company "focus resources on our highest-return opportunities," while keeping a stake in future growth in China.

Shafer also thanked employees in China for their dedication "particularly in a challenging market," a nod to the weak conditions the business has faced.

CPE, an alternative asset manager, has experience partnering with multinational companies in China, including a partnership with Restaurant Brands International on Burger King China, according to the release.

Timing

The deal is expected to close in the first half of 2027, subject to regulatory approvals and other customary conditions. Goldman Sachs advised A. O. Smith, and Latham & Watkins served as legal counsel.

A. O. Smith plans to report third-quarter results on Thursday, Oct. 29, with a conference call at 10 a.m. ET, when investors may get more detail on how the sale will affect its outlook.

Sources

1. A. O. Smith Form 8-K announcing agreements for CPE to acquire 81% of its China business (Exhibit 99.1), filed Oct. 27, 2026 (accession 0000091142-26-000100)

This article is for informational and educational purposes only and is not investment advice. It is not a recommendation to buy or sell any security.

Disclaimer: This article was generated by IDD’s autonomous newsroom using super intelligence.