A.o. Smith Corporation · NYSE:AOS
A.o. Smith — Smith A O — Merger or Acquisition (December 2010)
14 slides from A.o. Smith's merger presentation, Dec 13, 2010
Slide 1: Repositioning for Global Growth
Repositioning for Global Growth Exhibit 99.2
Slide 2: Forward-looking statements
This presentation contains statements that we believe are “forward - looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anti
Slide 3: Two-Step Transformation
Two – Step Transformation Step 1: Sale of Electric Motor Business to Regal Beloit Step 2: Build a Globally Diversified Company
Slide 4: Why Sell? Why Now?
Why Sell? Why Now? • Motor industry continues to consolidate manifesting in several interested global buyers presenting compelling offers • Remaking of profitable motor business complete • Regal Beloit and A. O. Smith motor combination provides scale and new energy efficient technologies to succeed
Slide 5: Step 1: Sale of Motor Segment to Regal Beloit
Step 1: Sale of Motor Segment to Regal Beloit
Slide 6: Transaction Highlights
Transaction Highlights Regal Beloit made the best offer for our shareholders, customers and employees in a competitive bid process with several contenders • Total consideration: $875 million ($700 million in cash and approximately $175 million in stock) • Over 8 times 2010E EBITDA • Approved by both
Slide 7: AOS Motor Segment
China/Asia 9% Distribution 23% AOS Motor Segment • $690 million in revenue (2010 E) • End markets based on 2009 revenue: • 7,800 employees • 20 manufacturing plants • Headquarters in Tipp City, OH General Industries 10% Pump 16% HVAC&R 17% Hermetic 25%
Slide 8: Use of Proceeds
Use of Proceeds Cash Proceeds Pay down Debt Taxes Cash Remaining Stock Consideration (approximately) $ 700 million $(145) million $(165) million $ 390 million $ 175 million
Slide 9: Step 2: Build a Globally Diversified Company
Step 2: Build a Globally Diversified Company
Slide 10: Acquisition Strategy: Leverage Core Competencies
World class global manufacturing and engineering platform Leading distribution relationships in North America and Asia Premium brand equity in Asia Acquisition Strategy: Leverage Core Competencies • Acquisitions will achieve ROIC hurdle within two years
Slide 11: Hierarchy of Global Water Needs
Hierarchy of Global Water Needs North America ‘W. Europe (Custom Water) China, Eastern Europe, India (Water Quality/Health) con, Health, Hygiene Chlorination, Heating/aoling, Point of Entry Access Infrastructure, Home Plumbing Aftica, Availability Middle East, Desalinization, Well driling, Pumping,
Slide 12: Shares of world energy consumption in the United States, China, and India
Figure 14. Shares of world energy consumption in the United States, China, and India, 1990-2035 percent of world totat 20 "United States "China. India 20 6 10 5 ° 1995 2000 2007 2015 2020 2028 2030 2085
Slide 13: Mega Trend Three: Forecasted GDP Growth
Mega Trend Three Average Annual Forecasted 2010 – 2015 GDP Growth Source: US EIA website, International Monetary Fund, World Economic Outlook Database, October 2010 3.3% 4.0% 4.2% 4.3% 4.4% 4.5% 4.5% 4.7% 8.4% 9.7% Australia Poland Russia Saudi Arabia Mexico Korea Turkey Brazil India China
Slide 14: Answers to your Questions
Answers to your Questions