The transaction includes a long-term brand licensing agreement that allows A. O. Smith to retain a 19% interest and continue receiving royalties, pushing the total value of the deal beyond $500 million when accounting for future licensing economics. Beyond the sale price, the company expects to repatriate roughly $80 million currently held in China. CEO Steve Shafer indicated that these proceeds, combined with the repatriated funds, will be primarily directed toward share repurchases, reinforcing the firm's commitment to shareholder returns.
Following a strategic review initiated in July 2025, the board determined that partnering with CPE provides the most viable path for the China business to navigate a complex market. While CPE takes control of day-to-day operations, A. O. Smith will remain involved in product innovation and service quality standards. The deal is expected to close in the first half of 2027, pending regulatory approvals. Goldman Sachs and Latham & Watkins served as advisors to A. O. Smith throughout the negotiations.
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