A. O. Smith has agreed to sell an 81% interest in its China business to alternative-asset manager CPE, shifting control of the operation to CPE while retaining a minority stake and the rights to license its brand there. The deal follows a strategic review launched in July 2025 and remains subject to customary closing conditions and regulatory approvals.
A. O. Smith says the transaction will let it focus resources on other opportunities while keeping a financial interest in the China business’s future growth. It expects to use the after-tax proceeds, along with cash brought back from China, primarily for share repurchases after the deal closes.
Key details
- Ownership and brand: CPE will own 81% of the China business. A. O. Smith will retain 19% and enter into a long-term brand-licensing agreement. As brand owner and minority shareholder, A. O. Smith says it will continue working with CPE on branding, product innovation and service quality.
- Valuation: The China business is valued at about $400 million on a cash-free, debt-free basis, before accounting for the value of future licensing payments. Including the estimated present value of those payments over the multi-decade licensing period, the total value is expected to exceed $500 million.
- Cash repatriation and capital returns: The transaction structure is expected to allow A. O. Smith to bring back about $80 million in cash currently held in China. The company intends to prioritize share repurchases with the after-tax proceeds and repatriated cash once the deal closes.
- Strategic rationale: A. O. Smith’s board concluded that a transaction with CPE was the best path forward for the China business and the company. The company says the arrangement will sharpen its portfolio focus while preserving its participation in future value creation in China.
- Transition: A. O. Smith and CPE say they are committed to supporting the China business’s customers and distributors during and after the transition. A. O. Smith’s chief executive described CPE as the right partner to lead the business.
What changes for investors: If completed, CPE will take majority ownership and control of the China operation. A. O. Smith will no longer own most of the business, but will retain a 19% interest and ongoing licensing economics. The company has said it plans to direct the resulting after-tax cash toward share repurchases; the announcement does not specify a closing date.