By Lisa Kerner
Charlotte, N.C., Dec. 10 - A.O. Smith Corp.'s largest stockholder, Smith Investment Co., will become a wholly owned subsidiary of the company in a tax-free exchange, it was announced on Wednesday.
Under the companies' merger agreement, Smith Investment shareholders will receive 2.396 shares of A.O. Smith class A common stock and 0.463 shares of A.O. Smith common stock for each share of Smith Investment stock they hold.
According to Smith Investment, it owns approximately 97.9% of the outstanding A.O. Smith class A common stock and about 7.1% of the outstanding A.O. Smith common stock.
A majority of Smith Investment's outstanding stock is owned by members of the Smith family, founder of A.O. Smith. Some members of the Smith family have agreed to vote their shares in favor of the merger.
A special committee of independent directors negotiated the transaction, which is expected to close in the second quarter of 2009.
To facilitate the merger, Smith Investment said it will spin off to its shareholders all of its assets and liabilities, other than its shares of A.O. Smith.
Stockholders will receive membership units in a newly formed limited liability company, Smith Investment Co. LLC.
Record date for the spinoff is Dec. 22.
The spinoff is not conditioned upon completion of the merger, Smith Investment said.
Morgan Stanley & Co. Inc. advised the special committee of the board of directors of A.O. Smith, and Duff & Phelps, LLC advised the special committee of the board of directors of Smith Investment.
Milwaukee-based A.O. Smith manufactures residential and commercial water heating equipment.
Smith Investment, also based in Milwaukee, provides multicolor printing and related services and commercial warehousing, trucking and packaging.
| Acquirer: | A.O. Smith Corp.
|
| Target: | Smith Investment Co.
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| Announcement date: | Dec. 10
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| Price per share: | 2.396 shares of A.O. Smith class A common stock and 0.463 shares of A.O. Smith common stock
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| Expected closing: | Second quarter of 2009
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| Stock price for acquirer: | NYSE: AOS: $30.73 on Dec. 9
|
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