ACHRNEWS

Nov. 15, 2005: A.O. Smith To Acquire Chinese Motor Manufacturer

November 15, 2005
MILWAUKEE - A.O. Smith Corp. has reached a definitive agreement to acquire Yueyang Zhongmin Special Electrical Machinery Co. Ltd., a manufacturer of hermetic motors located in Yueyang City, Hunan Province, China.

The purchase remains subject to final government approval, and the two companies expect to close the transaction by the end of November.

Yueyang Zhongmin manufactures 75-frame and larger hermetic motors used in commercial air conditioning and refrigeration compressors with forecasted 2005 sales of approximately (U.S.) $15 million. The acquisition is expected to add 3 to 5 cents to A.O. Smith's 2006 earnings per share.

"This strengthens A.O. Smith's hermetic motor business by providing additional capacity to produce our current range of hermetic motors for commercial applications as well as extending our product offering into larger frame motors used in centrifugal compressors and into high-voltage motors, products we currently do not manufacture," said Christopher L. Mapes, president of A.O. Smith Electrical Products Co., in announcing the agreement.

"Yueyang enjoys a good reputation for quality in this challenging, high-value market segment. The additional product range and manufacturing capacity will enable us to better serve our global HVAC customer base, particularly those customers with compressor operations in Asia."

Yueyang Zhongmin would be A.O. Smith's fourth acquisition of a Chinese electric motor manufacturer since 2001. A.O. Smith Electrical Products Co. currently has motor operations in Shenzhen, Changzhou, Taizhou, and Suzhou, China. A.O. Smith also markets and manufactures water heaters for the Chinese residential market from an operation in Nanjing.

For more information, visit www.aosmith.com.

Publication date: 11/14/2005