Giant water heaters in American hands for 240 million

Martin Vallieres
Press

–

Established since 1945 in East Montreal, the company incorporated under the name “Usines Giant” operates two manufacturing plants for electric and natural gas water heaters, which are sold under the well-known brands in residential plumbing and commercial: Giant, Cascades, EcoPeak, EcoGrid and Expert Plus.

According to information provided by its acquirer, AO Smith, whose shares are listed on the New York Stock Exchange, Giant Factories employs just over 300 people and has annual sales of around 130 million.

By comparison, AO Smith, headquartered in Milwaukee, Wisconsin, is a very large manufacturer of water heaters and other home drinking water treatment devices. It has industrial activities in eight countries and commercial activities in some 60 countries, employing a total of 15,000 people.

According to its most recent financial results, AO Smith has annualized sales (as of June 29) of around US $ 3.22 billion, up 6% year-on-year.

The company also shows strong profitability, with operating profit (annualized as of June 29) of US $ 572.7 million, up 11% year-on-year, and net profit of around US $ 441 million, up 13% year on year.

On the New York Stock Exchange, AO Smith is listed at US $ 10.2 billion in total capitalization. The value of its shares has appreciated 22% since the start of the year and 47% for three years, according to calculations by financial news agency Refinitiv.

What plan for Giant?

Now that she has just got her hands on one of her main peers – and competitors! – in Canada, what is AO Smith’s business plan for integrating Giant Factories into its North American activities?

In the acquisition press release disseminated by the company in the stock market in the United States, and that Press On Friday, AO Smith Chairman and CEO Kevin J. Wheeler said “Giant’s addition strengthens [sa] leading position as a global supplier of residential and commercial water heaters ”.

In addition, he says, “this acquisition supports our business strategy by increasing our market penetration in North America, by creating additional capacity. [de production] and improving our distribution capabilities ”.

In addition, in the same press release to the stock market, the management of AO Smith explains that the “addition of Giant to [ses] existing activities expands [sa] presence in the Canadian water heater market, which is characterized by a high percentage of demand for replacement, rather than first-time installation ”.

The company also explains to its investors that the “acquisition of Giant supports [ses] decarbonisation efforts by increasing the quantity of water heating products in a market mainly served by an electrical energy network from hydraulic, renewable and non-carbon sources ”.

As for the senior management of Usines Giant, its longtime CEO, Claude Lesage, indicates in the press release issued by AO Smith that he is “extremely excited by the benefits of a powerful association with a world leader in water.