MRO Magazine

Motor builder A.O. Smith aims to purchase Ontario’s GSW

Oakville, ON -- Milwaukee-based A.O. Smith Corp., a manufacturer of electric motors for industrial users, has reach...


Industry

January 24, 2006
By MRO Magazine
MRO Magazine

Oakville, ON — Milwaukee-based A.O. Smith Corp., a manufacturer of electric motors for industrial users, has reached agreement with GSW Inc.’s two majority shareholders on its proposed acquisition of GSW, a Canadian manufacturer. The parties have agreed to a purchase price of C$115 per share for the shares owned by the majority shareholders, subject to A.O. Smith completing its remaining due diligence and negotiating formal lock up agreements with the majority shareholders and a support agreement with GSW on terms satisfactory to GSW and A.O. Smith.

GSW’s two majority shareholders together hold shares representing 74% of the equity and 68% of the votes attached to all the shares. A.O. Smith has confirmed that the acquisition will be structured as an offer to all GSW shareholders to acquire their shares at $115 per share, regardless of the class of share held, and will not be subject to a minimum condition.

The two majority shareholders are subject to an exclusivity restriction under the agreement, provided A.O. Smith completes its due diligence and finalizes its agreements with the majority shareholders and GSW no later than February 3, 2006, and makes the formal take-over bid by February 23, 2006. The offer is expected to be completed by the end of March 2006.

On January 17, 2006, A.O. Smith received approval under the Investment Canada Act to proceed with the proposed acquisition. As previously announced, the U.S. Justice Department and Canadian Competition Bureau have favourably concluded their anti-trust investigations.

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GSW’s board of directors has struck a special committee of independent directors to review the transaction and has retained a financial advisor to advise it as to whether the transaction is fair to the minority shareholders from a financial point of view. GSW’s board will respond to the proposed offer after reviewing the formal offer and receiving the committee’s report and recommendation.

GSW Inc., based in Toronto, Ont., has been a manufacturing pioneer since 1847. Today, the company is a manufacturer and marketer of consumer durable products, including water heaters and building products. The company employs over 1,700 people at three operating divisions in Canada and the United States. GSW is listed on the Toronto Stock Exchange under the symbols GSW.a and GSW.sv.b. For more information about the company, visit www.gswinc.com.

A. O. Smith Corporation, with headquarters in Milwaukee, Wis., is a diversified manufacturer serving customers worldwide. It is one of North America’s largest manufacturers of electric motors, with a comprehensive line of hermetic, fractional horsepower, and integral horsepower motors for residential, commercial, and industrial applications. The company also is a manufacturer and marketer of residential and commercial water heating equipment, offering water heater brands including A. O. Smith, State and Reliance.

The company employs approximately 16,500 people at facilities in the United States, Canada, Mexico, England, Hungary, the Netherlands, and China.