A. O. Smith Corp.today announced it has signed a definitive agreement to acquire Lebanon, TN-basedLochinvar Corp.for $418 million and will not assume Lochinvar’s existing debt.
Lochinvar is a privately held manufacturer of high-efficiency commercial and residential boilers used in hydronic heating and hot water applications. The transaction is expected to close in the third quarter of 2011, subject to customary closing conditions and regulatory review.
“This acquisition fits squarely within our stated strategy to expand our core product offering with new technologies, which emphasize high-efficiency products that can be applied globally,” saidPaul W. Jones, chairman and CEO of A. O. Smith. “This is a significant first step in growing our diversified global water heating platform and the beginning of the redeployment of the proceeds from the sale of our Electrical Products Company.”
“The addition of Lochinvar expands our product offering and gives us access to proven high-efficiency boiler technology,” saidAjita G. Rajendra, president of A. O. Smith Water Products Co. “The $1.1 billion North American boiler industry is in the midst of a transition to the new high-efficiency condensing technology, which we believe is growing several times faster than GDP,” he continued. “We expect high-efficiency boiler products to continue to grow at an accelerated rate for the foreseeable future.”
Rajendra also mentioned significant growth opportunities in regions outside of North America, especially in China, in regards to Lochinvar’s higher-efficiency boilers, as more commercial customers seek ways to save energy and reduce operating costs. “This opportunity becomes even more compelling when we couple Lochinvar’s leading technology with A. O. Smith’s many years of experience, strong water heater manufacturing platform and prominent brand in China,” he said.
Lochinvar’s product offerings are highly complementary to A. O. Smith’s and include: residential and commercial high-efficiency condensing and non-condensing boilers, residential and commercial water heaters, indirect water heaters, storage tanks, solar thermal commercial water heaters, and commercial and residential pool and spa heaters.
The purchase also includes Lochinvar Ltd., the company’s UK-based subsidiary.
For more information about the acquisition,read here.
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