Business Acquisitions and Divestitures

6 Months Ended

Mar. 31, 2022

Acquisitions and Divestitures

Assets and liabilities held for sale

During the fourth quarter of 2020, the Company announced that it had initiated a plan to divest the TerraSource Global (“TerraSource”) and flow control businesses, which included the Red Valve business (“Red Valve”) and Abel Pumps business (“ABEL”), which operated within the Advanced Process Solutions reportable operating segment, as these businesses were no longer considered a strategic fit with the Company’s long-term growth plan and operational objectives. As discussed below, the Company completed the divestitures of Red Valve on December 31, 2020, ABEL on March 10, 2021, and TerraSource on October 22, 2021. The Company had determined that these businesses met the criteria to be classified as held for sale, and therefore classified the related assets and liabilities as held for sale on the Consolidated Balance Sheets in periods prior to their completed sale.

The following is a summary of the major categories of assets and liabilities that have been classified as held for sale on the Consolidated Balance Sheet at September 30, 2021:


Cash and cash equivalents	$	3.5
Trade receivables, net	7.8
Inventories	12.0
Property, plant and equipment, net	12.0
Operating lease right-of-use assets, net	1.9
Intangible assets, net	49.5
Goodwill	12.4
Other assets	4.2
Valuation allowance on disposal group (1)	(47.1)
Total assets held for sale	$	56.2

Trade accounts payable	$	5.2
Liabilities from long-term manufacturing contracts and advances	7.5
Operating lease liabilities	2.0
Deferred income taxes	1.9
Other liabilities	2.3
Total liabilities held for sale	$	18.9

(1)The Company adjusted the carrying value to fair value less costs to sell for certain assets held for sale during the year ended September 30, 2021. Those assets were sold during the six months ended March 31, 2022.

The Company determined that the exit from these businesses did not represent a strategic shift that had a major effect on its Consolidated Results of Operations, and therefore these businesses were not classified as discontinued operations.

Divestiture of Flow Control Businesses

On December 31, 2020, the Company completed the divestiture of Red Valve to DeZURIK, Inc. in a transaction valued at $63.0. The sale included cash proceeds received at closing of $59.4, including working capital adjustments, and a $5.0 note receivable, included within other long-term assets on the Consolidated Balance Sheet.

As a result of the Red Valve divestiture, the Company recorded a pre-tax gain of $31.6 in the Consolidated Statement of Operations during the six months ended March 31, 2021. The related tax effect resulted in tax expense of $3.8 and was included within income tax expense in the Consolidated Statement of Operations during the six months ended March 31, 2021. The Company incurred $2.9 of transaction costs associated with the sale during the six months ended March 31, 2021, which were recorded within operating expenses in the Consolidated Statement of Operations. Red Valve’s results of operations were included within the Advanced Process Solutions reportable operating segment until the completion of the divestiture on December 31, 2020.

On March 10, 2021, the Company completed the divestiture of ABEL to IDEX Corporation, in a transaction valued at $103.5, subject to customary post-closing adjustments. The sale included cash proceeds received at closing of $106.3, including working capital adjustments.

As a result of the ABEL divestiture, the Company recorded a pre-tax gain of $34.1, after post-closing adjustments, in the Consolidated Statement of Operations during the three and six months ended March 31, 2021. The related tax effect resulted in tax expense of $6.7 and was included within income tax expense in the Consolidated Statement of Operations during the three and six months ended March 31, 2021. The Company incurred $3.0 and $3.8 of transaction costs associated with the sale during the three and six months ended March 31, 2021, respectively, which were recorded within operating expenses in the Consolidated Statements of Operations. ABEL’s results of operations were included within the Advanced Process Solutions reportable operating segment until the completion of the divestiture on March 10, 2021.

Divestiture of TerraSource

On October 22, 2021, the Company completed the divestiture of TerraSource pursuant to a Contribution Agreement (“Agreement”) between the Company and certain affiliated companies of industrial holding company Right Lane Industries (“RLI”). Under the terms of the Agreement, Hillenbrand contributed TerraSource and its subsidiaries to a newly formed entity, TerraSource Holdings, LLC (“Holdings”), with RLI obtaining majority ownership and full operational control of TerraSource. In exchange for contributing the TerraSource business, the Company received consideration in the form of a five-year note with initial principal amount of $25.6, subject to certain adjustments, and also retained a 49% equity interest in Holdings through one of the Company’s indirect wholly-owned subsidiaries. The fair value of the total consideration received by the Company was $27.7 and is recorded within other long-term assets in the Consolidated Balance Sheet. Subsequent to the divestiture, the Company’s equity interest in Holdings is accounted for under the equity method of accounting as prescribed by GAAP.

As a result of the TerraSource divestiture, the Company recorded a pre-tax loss, subject to customary post-closing adjustments, of $3.1 in the Consolidated Statement of Operations during the six months ended March 31, 2022. The Company incurred $0.4 of transaction costs associated with the divestiture during the six months ended March 31, 2022, which were recorded within operating expenses in the Consolidated Statement of Operations. TerraSource’s results of operations were included within the Advanced Process Solutions reportable operating segment until the completion of the divestiture on October 22, 2021.