MILWAKEE - A. O. Smith Corporation (NYSE: AOS), a global water technology company, announced today its agreement to acquire Pureit, a water purification business with a strong presence in India, from Unilever (LON:ULVR) for approximately USD $120 million in cash. This move is set to enhance A. O. Smith's footprint in the South Asian market.
Pureit, known for its range of residential water purification solutions, generates annual sales near USD $60 million, primarily in India. The transaction is expected to be completed by the end of 2024. According to the company, this strategic acquisition is projected to double A. O. Smith's market presence in the region and is in line with their corporate strategy to expand their premium product portfolio and distribution capabilities.
Kevin J. Wheeler, chairman and chief executive officer of A. O. Smith, emphasized the alignment of Pureit's culture of innovation and strong brand recognition with A. O. Smith's premium brand positioning. He expressed confidence that Pureit's dedication to customer service will complement A. O. Smith's broad product offerings in South Asia.
Eduardo Campanella, president of Unilever Home Care, remarked on the divestment as a step towards focusing Unilever's portfolio on higher-growth areas, in accordance with their Growth Action Plan. Campanella also expressed confidence in A. O. Smith's future stewardship of the Pureit brand.
A. O. Smith is set to release its second-quarter financial results for 2024 on Tuesday, July 23, before market opening, and plans to provide additional details on the acquisition during a webcasted conference call scheduled for 10 a.m. Eastern Time.
This announcement contains forward-looking statements, which involve certain risks and uncertainties. These include the need for regulatory approvals, the realization of expected transaction benefits, and the integration of the acquired business.
The company highlights that actual results may differ materially from those anticipated in these statements due to various factors including international tariffs, trade disputes, and currency fluctuations.
Celebrating 150 years in business, A. O. Smith continues to be a prominent manufacturer of water heating equipment, boilers, and water treatment products globally. This acquisition is part of the company's ongoing efforts to innovate and apply energy-efficient solutions to its product line. The information reported here is based on a press release statement.
In other recent news, AO Smith (NYSE:AOS) Corporation has reported a slight earnings beat in its first quarter of 2024, with earnings per share (EPS) of $1.00, outdoing the analyst estimate by $0.01.
Still, the company's revenue for the quarter fell short, totaling $978.8 million against the consensus estimate of $997.83 million, a decrease of roughly 1.9%. In terms of corporate changes, AO Smith announced the retirement of Mark Petrarca, Senior Vice President of Human Resources and Public Affairs, with Curt Selby named as his successor.
Jefferies has maintained its Hold rating on AO Smith, keeping a $90.00 price target. The firm's analysis indicates stable demand for AO Smith's products and efficient management of supply chain and stock. It also suggests that the entry of General Electric (NYSE:GE) into the market has not disrupted AO Smith's business.
These are the recent developments for AO Smith. The company has reaffirmed its full-year 2024 outlook, projecting a sales increase of 3% to 5% and an EPS range of $3.90 to $4.15. AO Smith's commitment to shareholder returns is also evident in its share repurchase program, with plans to spend $300 million throughout 2024.
InvestingPro Insights
In the wake of A. O. Smith Corporation's (NYSE: AOS) recent announcement to acquire Pureit, the company's financial health and market performance offer additional insights into this strategic move. A. O. Smith boasts a strong balance sheet, as evidenced by the fact that it holds more cash than debt, a testament to its financial prudence and stability. This could provide them with the flexibility to pursue growth opportunities such as the Pureit acquisition without overleveraging their position.
Investors might also be encouraged by A. O. Smith's consistent track record of rewarding shareholders. The company has not only raised its dividend for 15 consecutive years but has also maintained dividend payments for 16 consecutive years, according to InvestingPro Tips. This demonstrates a commitment to returning value to shareholders and suggests confidence in the company's long-term cash flow generation capabilities.
Looking at the InvestingPro Data, A. O. Smith's market capitalization stands at an adjusted $12.88 billion, reflecting its substantial size and influence within the industry. The company's P/E ratio is currently at 22.86, which, when adjusted for the last twelve months as of Q1 2024, slightly decreases to 21.92.
This valuation metric, along with a notably low PEG ratio of 0.15 for the same period, indicates that the company's stock may be trading at a discount relative to its near-term earnings growth potential. Moreover, A. O. Smith's revenue growth for the last twelve months as of Q1 2024 was 3.28%, suggesting steady growth in its operations.
For readers interested in deeper analysis and more InvestingPro Tips, A. O. Smith has a comprehensive profile on InvestingPro with additional tips to guide investment decisions. To gain access to these valuable insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 13 additional InvestingPro Tips available for A. O. Smith, providing further insights into the company's performance and potential.
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