Acquisitions and Dispositions

3 Months Ended

Mar. 31, 2015

Acquisitions and Dispositions

Acquisitions and Dispositions

3.Acquisitions and Dispositions

Acquisitions

2015 Activity

During the first quarter of 2015, the company completed two business combination transactions. In addition, one transaction was completed subsequent to the end of the first quarter.

In December 2014, subsequent to the company’s fiscal year end for international operations, the company entered into a licensing agreement and business acquisition with Aseptix Health Sciences NV. With pre-acquisition sales of less than $1 million, the acquired business became part of the company’s Global Institutional segment during the first quarter of 2015.

Also in December 2014, subsequent to the company’s fiscal year end for international operations, the company acquired Commercial Pest Control Pty Ltd, an Australian commercial pest control company. With pre-acquisition sales of less than $1 million, the acquired business became part of the company’s Other segment during the first quarter of 2015.

Subsequent to the company’s fiscal quarter end for international operations, the company acquired certain assets from Clariant AG, based in Brazil and Argentina. With pre-acquisition annual sales of approximately $4 million, the acquired business will become part of the company’s Global Industrial segment during the second quarter of 2015.

2014 Activity

During the first quarter of 2014, the company completed the acquisition of AkzoNobel’s Purate business (“Purate”). Headquartered in Sweden, Purate specializes in global antimicrobial water treatment. Pre-acquisition annual sales of the business were approximately $23 million. The acquired business became part of the company’s Global Industrial segment during the first quarter of 2014.

Acquisition summary

Acquisitions during the first three months of 2015 and all of 2014 were not material to the company’s consolidated financial statements. The aggregate purchase price of acquisitions has been reduced for any cash or cash equivalents acquired with the acquisitions. Based upon purchase price allocations, the components of the aggregate purchase prices of other completed acquisitions during the first quarter of 2015 and 2014 are shown in the following table.

	First Quarter Ended
	March 31
(millions)	2015			2014
Net tangible assets acquired	$	1.1		$	12.8
Identifiable intangible assets
Customer relationships	0.6			1.9
Patents	2.5			—
Trademarks	0.1			0.8
Other technology	0.2			2.9
Total intangible assets	3.4			5.6
Goodwill	6.3			6.9
Total aggregate purchase price	10.8			25.3
Acquisition related liabilities and contingent consideration	(0.1		)	1.2
Net cash paid for acquisitions, including contingent consideration	$	10.7		$	26.5

The weighted average useful lives of identifiable intangible assets acquired during the first three months of 2015 and 2014, as shown in the previous table, were 11 and 10 years, respectively.

Champion acquisition

On April 10, 2013, the company completed its acquisition of Champion, a global energy specialty products and services company delivering its offerings to the oil and gas industry.

During the first quarter of 2014 purchase price allocations were finalized, resulting in net adjustments of $16.9 million to the value of Champion assets acquired and liabilities assumed, with an offset to goodwill. The adjustments primarily related to estimated liabilities, updated property, plant and equipment values and deferred taxes. As the adjustments were not significant, they were recorded in 2014 and are not reflected in the 2013 Consolidated Balance Sheet.

In accordance with the acquisition agreement, except under limited circumstances, the company was required to pay an additional amount in cash, up to $100 million in the aggregate, equal to 50% of the incremental tax on the merger consideration as a result of increases in applicable gains and investment taxes after December 31, 2012. In January 2014, in accordance with the above discussion, an additional payment of $86.4 million was made to the acquired entity’s former stockholders.

The company deposited approximately $100 million of the original Champion purchase price consideration in an escrow account to fund post-closing adjustments to the consideration, and covenant and other indemnification obligations of the acquired entity’s former stockholders for a period of two years following the effective date of the acquisition. The potential future recovery of amounts from the escrow account by the company may be reflected within cost of sales, selling, general and administrative expenses, and/or special (gains) and charges within the Consolidated Statement of Income.

Dispositions

There were no business disposals during the first quarter of 2015 or 2014.