A. O. Smith announced a definitive agreement to acquire Leonard Valve Company, a leading provider of digital thermostatic mixing valves and advanced boiler controls, for $470 million in cash. The transaction, which values Leonard at roughly $412 million after estimated tax benefits, represents an adjusted multiple of about 12 times forecast 2026 EBITDA and is expected to close in the first quarter of 2026 subject to customary closing conditions and regulatory approvals.
The deal expands A. O. Smith’s presence in the water‑management market and complements its core water‑heating and boiler businesses. Leonard’s products—many of which carry the Heat‑Timer brand—are designed for commercial and institutional settings such as hospitals, schools, universities and industrial facilities. By integrating Leonard’s digitally enabled valves and controls, A. O. Smith can offer more integrated, high‑performance systems that enhance safety, compliance and energy efficiency for its customers.
Financially, the acquisition is expected to be accretive to earnings per share in 2026 after one‑time charges. A. O. Smith will fund the deal with a mix of cash on hand and committed debt financing, a structure that preserves liquidity while allowing the company to maintain its investment in growth initiatives. The 12× multiple aligns with industry peers and reflects Leonard’s strong growth prospects and the strategic fit with A. O. Smith’s digital and connected water strategy.
Steve Shafer, CEO of A. O. Smith, said the acquisition “represents a compelling strategic fit and a meaningful expansion of our presence in the water‑management market.” He added that Leonard’s “rich history of engineering excellence and commitment to product quality are deeply aligned with our own culture and values,” and that the combined portfolio will “enable us to deliver a more integrated, high‑performance system through our established channels.”
A. O. Smith’s recent quarterly results provide context for the deal. In Q3 2025 the company reported earnings per share of $0.94 versus a consensus estimate of $0.90, a beat of $0.04 or 4.4 %. The beat was driven by strong pricing actions and higher volumes in North America, where operating margin rose 110 basis points to 24.2 %. Revenue, however, missed the consensus estimate by $3.83 million, falling 0.48 % to $942.5 million, largely because of a decline in sales in China and weaker demand in the residential water‑heater segment. The Rest of World segment saw margin improvement to 7.4 % despite a sales decline, reflecting a more favorable mix of commercial and institutional customers.
The acquisition positions A. O. Smith to address the 1.64 % decline in revenue over the past twelve months and to counter margin compression in its core businesses. By adding Leonard’s high‑margin, digitally enabled products, the company can broaden its commercial exposure to healthcare, education and industrial markets, create new revenue and margin opportunities, and strengthen its competitive position in the commercial and institutional segments. The deal also supports the company’s broader strategy of expanding its digital and connected water portfolio, a trend that is gaining traction across the building‑technology and water‑management industries.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.