"This acquisition would nearly double the size of A. O. Smith's water heating business and would expand the breadth and depth of our product line," said Chairman and Chief Executive Officer Robert J. O'Toole in a prepared statement. "State's marketing efforts are well-balanced, with a strong presence in the retail, wholesale, OEM home construction, and specialty market channels. A. O. Smith has an excellent presence in the wholesale channel that is complemented by State's positions in both retail as well as wholesale."

The deal marks the end of State's private ownership. The company was founded in 1946 by the Lindahl family.

The acquisition includes APCOM, a State subsidiary that manufactures elements, thermostats, drain valves, and other water heater components. According an A.O. Smith press release, acquiring the APCOM unit would enable A. O. Smith to enter the water heater component business for the first time. APCOM currently supplies components to four of the six largest North American water heater manufacturers.

State, headquartered in Ashland City, Tenn., reported fiscal 2000 sales of approximately $325 million. In addition to the Ashland City facility, State has plants in Franklin and Cookeville, Tenn., and Charlotte, N.C., and employs approximately 2,200 people.

A. O. Smith Water Products Co., based in Irving, Texas, has facilities in McBee, S.C.; Renton, Wash.; El Paso, Texas; Florence, Ky.; Alsip, Ill.; Juarez, Mexico; Veldhoven, the Netherlands; Stratford, Ontario, Canada; and Nanjing, China and employs approximately 2,500 people worldwide. Water Products Co. reported record sales of $346 million in 2000.