Business Combinations

9 Months Ended

Jun. 30, 2013

Business Combinations

Business Combinations

5.BUSINESS COMBINATIONS

2013 Business Combinations

On 31 May 2013, we acquired EPCO Carbondioxide Products, Inc. (EPCO), the largest independent U.S. producer of liquid carbon dioxide (CO2).   This acquisition expands our North American offerings of bulk industrial process gases.  In addition, we acquired Wuxi Chem-Gas Company, Ltd. (WCG) on 1 April 2013.  This acquisition provides us with additional gases presence in the Jiangsu Province of China.  The acquisitions were accounted for as business combinations, and their results of operations were consolidated within the Merchant Gases business segment after the acquisition dates.  The aggregate purchase price, net of cash acquired, for these acquisitions was $134, and resulted in recognition of $67 of goodwill.

2012 Business Combinations

Indura S.A.

In July 2012, we acquired a 64.8% controlling equity interest in the outstanding shares of Indura S.A.We paid cash consideration in Chilean pesos (CLP) of 345.5 billion ($690) and assumed debt of CLP113.8 billion ($227) for these interests.Prior to the acquisition, Indura S.A. was the largest independent industrial gas company in South America. Indura S.A.'s integrated gas and retail business comprises packaged gases and hardgoods, liquid bulk, healthcare, and on-sites.

Under the purchase agreement, the largest minority shareholder has a right to exercise a put option to require Air Products to purchase up to a 30.5% equity interest during the two-year period beginning on 1 July 2015, at a redemption value equal to fair market value (subject to a minimum price based upon the acquisition date value escalated by an inflation factor). Under the agreement, we also had an obligation to purchase 2.0% of the remaining shares of Indura S.A. During the third quarter of 2013, we purchased these shares for CLP5.5 billion ($11).

The acquisition of Indura S.A. was accounted for as a business combination. Following the acquisition date, 100% of the Indura S.A. results were consolidated in our Merchant Gases business segment. The portion of the business that is not owned by the Company is recorded as noncontrolling interests.

The following table summarizes the fair value of identifiable assets acquired and liabilities assumed in the acquisition of Indura S.A. and the resulting goodwill as of the acquisition date.

	Allocation of Purchase Price
	Trade receivables, net	$	131.2
	Inventories		103.5
	Other current assets and (liabilities)(A)		(67.5)
	Plant and equipment		397.2
	Intangible assets		382.1
	Current portion of long-term debt and short-term borrowings		(70.8)
	Long-term debt		(279.8)
	Deferred income taxes		(131.3)
	Other noncurrent assets and (liabilities)		(12.3)
	Fair Value of Identifiable Net Assets Acquired	$	452.3
	Goodwill		626.2
	Noncontrolling interests (including redeemable noncontrolling interest)		(388.9)
	Total	$	689.6
(A)Includes cash and cash items, prepaid expenses, other current assets, payables and accrued liabilities, and other current liabilities.

The noncontrolling interests of Indura S.A., including redeemable noncontrolling interest, were recorded on the acquisition date at fair value. Refer to Note 14, Noncontrolling Interests, for additional information.

DA NanoMaterials LLC

On 2 April 2012, we acquired E.I. DuPont de Nemours and Co. Inc.'s 50% interest in our joint venture, DuPont Air Products NanoMaterials LLC (DA NanoMaterials) for $158 ($147 net of cash acquired of $11). The transaction was accounted for as a business combination and beginning in the third quarter of 2012, the results of DA NanoMaterials were consolidated within our Electronics and Performance Materials business segment.

Prior to the acquisition, we accounted for our 50% interest in DA NanoMaterials as an equity-method investment. The three and nine months ended 30 June 2012 include a gain of $85.9 ($54.6 after-tax, or $.25 per share) as a result of revaluing our previously held equity interest to fair value as of the acquisition date. This gain is reflected on the consolidated income statements as “Gain on previously held equity interest.”

For additional information regarding the Indura S.A. and DA NanoMaterials acquisitions, refer to Note 5, Business Combinations, in our 2012 Form 10-K.