A. O. Smith Acquires Canada Water Heater Manufacturer Giant Factories, Inc.
Expands presence in Canada market; provides strong replacement demand opportunity
MILWAUKEE, Oct. 19, 2021 /PRNewswire/ -- Global water technology company A. O. Smith Corporation (the "Company") (NYSE: AOS) announced today that it has acquired Giant Factories, Inc., a Canada-based manufacturer of residential and commercial water heaters, with trailing twelve-month sales of approximately USD $105 million. The purchase price is approximately USD $192 million in cash, subject to customary adjustments. Taking into account an expected tax benefit of approximately $6.5 million that the Company will achieve as a result of treating the transaction as a purchase of assets for tax purposes, and projected operating synergies expected to be achieved over a two-year period, the purchase price represents a multiple of approximately 9.5 x adjusted 2023 projected EBITDA. The acquisition is expected to be neutral to fourth quarter 2021 EPS due to normal purchase accounting adjustments and accretive to EPS in the first full year post closing.
This acquisition strengthens our leadership position as a global supplier of residential and commercial water heaters.
"The addition of Giant strengthens our leadership position as a global supplier of residential and commercial water heaters. The acquisition also supports our corporate strategy by increasing our North America market penetration, creating additional capacity and enhancing our distribution capabilities," said Kevin J. Wheeler, chairman and chief executive officer. "Along with its rich history, established relationships and talented team, Giant's values and business approach align with ours, and we look forward to welcoming Giant's employees to the A. O. Smith family."
Claude Lesage, Giant Factories, Inc. president, commented, "We are extremely excited about the benefits of a powerful combination with a world leader in global water technology. This natural and logical partnership with A. O. Smith will enhance prospects for our customers, employees, and suppliers."
A family-owned business founded in 1945, Giant markets its water heaters under the Giant brand and employs more than 300 people, primarily in Canada. Giant manufactures water heaters at two facilities in Montreal and sells water heating products across Canada.
The addition of Giant to A. O. Smith's existing water heater operations enlarges the company's presence in the Canada water heater market, which is characterized by a high percentage of replacement demand.
The acquisition of Giant also supports A. O. Smith's decarbonization efforts by increasing the amount of water heating products in its portfolio that are supplied by a renewable energy grid – Giant's end markets are mainly served by a grid that is primarily hydro-sourced and non-carbon intensive.
A. O. Smith will release its third quarter 2021 financial results before the market opens on Thursday, October 28 and host a webcasted conference call at 10 a.m. (eastern daylight time). Additional details on the acquisition will be provided at that time.
About A. O. Smith
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SOURCE A. O. Smith Corporation
Company Codes: NYSE:AOS
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