A.O.Smith To Sell 81% Stake In China Business To CPE

What happened

A. O. Smith agreed to sell an 81% stake in its China business to alternative asset manager CPE for about $400 million, while keeping a 19% interest and brand licensing royalties. The deal is expected to close in the first half of 2027.

Confirmed

Global impact / market context

A. O. Smith gets cash to fund share repurchases, which means buying back its own stock, and can bring home about $80 million held in China. Keeping a 19% stake and royalty payments lets it share in future growth without full ownership.

Analyst inference

The sale shrinks A. O. Smith's direct China exposure, which means less reliance on that market's results. Investors may weigh the buyback boost against giving up most of the China business, and the 2027 closing leaves time for approvals.

Analyst inference

What to watch

1. The deal is expected to close in the first half of 2027, so watch for updates on whether that timeline holds through required approvals. Confirmed
2. Watch whether management uses the proceeds and repatriated cash for share repurchases as stated, and how large those buybacks turn out to be. Proposed
3. Watch third-quarter results on October 29 for signs of China business performance and any change in costs or revenue before the sale closes. Analyst inference

Evidence

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