SPECIAL TO CONTRACTOR
JOHNSON CITY, TENN. — Canadian water heater manufacturer GSW Inc. purchased American Water Heater Co. in early April from Southcorp Ltd., an Australian winemaker that now has divested all its holdings in water heater companies. In December 2001, Southcorp sold its Australian and Asian water heater businesses, which included the Rheem brand, to Japan-based Paloma Industries, which owns the rights to the Rheem name elsewhere. (January, pg. 10).
The price paid by GSW was not disclosed. According to published reports, however, the Rheem and AWHC water heater transactions and an unrelated sale of its Clean Air Systems company have netted Southcorp an after-tax profit of $69 million. AWHC has annual sales of $220 million.
“We’re all quite encouraged because they’re in the business and they understand the dynamics of the market,” AWHC President Robert Trudeau told CONTRACTOR.
“We anticipate no changes in day-to-day operations or in interactions with our customers,” he said. “Given the timing of both companies’ growth and strategic goals, combined with their different geographic focuses, these two companies make a great fit.”
Ontario-based GSW manufactures residential and commercial water heaters, pumps and building products; it has been in business for more than 150 years. GSW said it remains focused on the residential and commercial water heater industry as its primary business. GSW also operates Aermotor Pumps based in Conway, Ark.
“This acquisition makes GSW the third largest water heater manufacturer in North America and supports the company’s strategy to grow our core businesses,” said Andrew Ferrier, GSW’s president and CEO. He added that the two companies would continue to be run as separate businesses.
AWHC, with corporate offices and manufacturing facilities in Johnson City, employs 1,100 people. The 500,000-sq.-ft. plant includes gas and electric manufacturing lines.
AWHC’s PROline residential and commercial products are designed and built exclusively for professional plumbers, the company said. AWHC also manufactures the Whirlpool brand water heaters for Lowe’s Home Improvement Warehouse and the U.S. Craftmaster brand residential water heaters for hardware retailers. Its American Parts Supply operation sells factory-authorized replacement parts to professional plumbers, wholesalers and retailers.
In 1999, AWHC introduced its Flame Guard Safety System that is intended to help save lives by reducing the risk of flammable vapor-related home fires. The company said that its Energy Smart electric water heater could help consumers save up to 30% of their off-cycle energy costs.
According to a published report, Southcorp is getting out of the water heater business to concentrate on its wine production. Southcorp is Australia’s largest winemaker and exporter. Its wine brands include Penfolds, Rosemount and Lindemans.