HUL to sell Pureit to A. O. Smith for an enterprise value of $72 million

The acquisition of Pureit is expected to close by the end of 2024 and is not expected to have a material impact on earnings in the first year, A. O. Smith said in its release

Leading fast-moving consumer goods (FMCG) company Hindustan Unilever Limited (HUL) on Monday announced the sale of its two-decade old water purification business, Pureit, to AO Smith for an enterprise value of Rs 601 crore.

“This move is in line with our strategic intent to focus sharply on our core categories. Pureit provides essential water purification solutions to millions of loyal consumers, and I am confident the brand will thrive further under the ownership of AO Smith,” Rohit Jawa, CEO & managing director of HUL said in a company statement.

In its global release A.O. Smith said that the purchase price will be approximately $120 million in cash, subject to customary adjustments.

The deal is expected to close by the end of 2024 and is not expected to have a material impact on earnings in the first year, A O Smith said in its release. 

“The proposed transaction will happen by way of a slump sale through a business transfer agreement between the HUL and AO Smith India Water Products,” HUL said in its stock exchange filing. 

In the financial year 2024 (FY24), the turnover of HUL’s water purification business stood at Rs 293 crore, which is less than one per cent of FMCG giant’s turnover. 

The transaction is subject to customary closing conditions, and HUL will continue to manage the business until the completion of the transaction.

“We believe the addition of Pureit will strengthen our leadership position as a global supplier of premium water treatment products and will double our market penetration in South Asia. The acquisition will also support our corporate strategy by enhancing our premium product portfolio and distribution capabilities,” said Kevin J Wheeler, chairman and CEO of AO Smith Corp.

Parag Kulkarni, president of AO Smith India Water Products, said, “The Pureit brand, known for innovative water purification products, strong brand recognition and dedication to customer service, complements AO Smith’s geographic and channel presence. The Pureit team’s deep understanding of consumer needs and water treatment expertise adds tremendous strength to AO Smith in India, and we look forward to welcoming the Pureit team to the A. O. Smith family.”

HUL has been offloading non-core brands for a while now, as it wants to focus on core areas. It had sold Annapurna and Captain Cook last year.