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ACQUISITIONS AND DISPOSITIONS

9 Months Ended

Sep. 30, 2021

3. ACQUISITIONS AND DISPOSITIONS

Acquisitions

The Company makes business acquisitions that align with its strategic business objectives. The assets and liabilities of acquired businesses are recorded in the Consolidated Balance Sheets at fair value as of their acquisition dates. The purchase price allocation is based on estimates of the fair value of assets acquired, liabilities assumed and consideration transferred. Purchase consideration transferred is reduced by the amount of cash or cash equivalents acquired.

Acquisitions during the first nine months of 2021 and 2020 were not significant to the Company’s consolidated financial statements; therefore, pro forma financial information is not presented.

During the third quarter of 2021, the Company acquired National Wiper Alliance, Inc. (“NWA”), a U.S.-based business which sells dry wipes for healthcare and institutional applications. NWA became part of the Global Healthcare & Life Sciences reporting segment.

During the first quarter of 2021, the Company acquired VanBaerle Hygiene AG (“VanBaerle”), a Swiss-based business which sells cleaning products and related services to restaurants, long-term care facilities, hotels and laundries primarily for institutional applications. VanBaerle became part of the Global Institutional reporting segment. The purchase price included immaterial amounts of holdback and contingent consideration, which are recorded within other liabilities on the Consolidated Balance Sheets as of September 30, 2021.

Also, during the first quarter of 2021, the Company acquired TechTex Holdings Limited (“TechTex”), a U.K.-based business which sells wet and dry wipes and other nonwovens products primarily for life sciences and healthcare applications. TechTex became part of the Global Healthcare & Life Sciences reporting segment. The purchase price included an immaterial holdback amount that was subsequently settled prior to September 30, 2021.

The purchase accounting for these acquisitions are preliminary and subject to change as the Company finalizes the valuation of intangible assets, income tax balances and working capital. The Company does not expect any of the goodwill related to its acquisitions of VanBaerle or TechTex to be tax deductible, whereas the goodwill arising from the application of NWA is expected to be tax deductible.

Other than CID Lines, the Company did not close on any other business acquisitions during the first nine months of 2020.

The following table summarizes the acquisition date fair value of net assets acquired from the Company’s acquisitions other than CID Lines during the first nine months of 2021 and 2020.

Third Quarter Ended

Nine Months Ended

September 30

(millions)

2021

2020

2021

2020

Net tangible assets (liabilities) acquired and equity method investments

$14.8

$12.4

Identifiable intangible assets

Customer relationships

41.0

72.1

Trademarks

1.1

4.7

Non-compete agreements

3.0

Other technology

1.5

Total intangible assets

45.1

81.3

Goodwill

60.2

119.2

Total aggregate purchase price

120.1

212.9

Acquisition-related liabilities and contingent consideration (a)

(4.4)

Net cash paid for acquisitions, including acquisition-related

liabilities and contingent consideration

$120.1

$208.5

(a)

Subsequent to the acquisitions, $1.4 in contingent consideration was remitted to the seller during the first nine months of 2021 and is included in investing activities on the Consolidated Statements of Cash Flows.

During the first nine months of 2020, the Company recorded purchase accounting adjustments associated with the finalization of the purchase accounting on its 2019 acquisitions. As a result of these purchase accounting adjustments, the net intangible assets and goodwill recognized from these acquisitions increased by $1.3 million and $0.3 million, respectively. In conjunction with the finalization of its purchase accounting, the Company made $3.5 million of acquisition-related payments which primarily consisted of the release of holdback liabilities and payment of contingent consideration.

The weighted average useful life of identifiable intangible assets acquired during the first nine months of 2021 was 14 years.

CID Lines Acquisition

On May 11, 2020, the Company acquired CID Lines for total consideration of $506.9 million in cash. CID Lines had annualized pre-acquisition sales of approximately $110 million and is a leading global provider of livestock biosecurity and hygiene solutions based in Belgium.

The Company incurred certain acquisition and integration costs associated with the transaction that were expensed and are reflected on the Consolidated Statements of Income. Further information related to the Company’s special (gains) and charges is included in Note 2.

The following table summarizes the acquisition date fair value of net assets acquired from the Company’s acquisition of CID Lines.


(millions)	May 11, 2020
Tangible assets		$54.1
Identifiable intangible assets
Customer relationships		147.5
Trademarks		58.6
Acquired technologies and product registrations		47.7
Total assets acquired		307.9

Goodwill		274.8

Total liabilities		97.2
Net consideration transferred to sellers		$485.5

Tangible assets are primarily comprised of accounts receivable of $30.1 million, property, plant and equipment of $7.7 million and inventory of $16.3 million. Liabilities primarily consist of deferred tax liabilities of $64.8 million and current liabilities of $32.4 million.

Customer relationships, trademarks, and other technology and product registrations are being amortized over weighted average lives of 14, 14, and 16 years, respectively.

Goodwill of $274.8 million arising from the acquisition consists largely of the synergies and economies of scale expected through adding complementary geographies and innovative products to the Company’s Food and Beverage businesses. CID Lines became part of the Global Industrial reportable segment. None of the goodwill recognized is expected to be deductible for income tax purposes.

During the first six months of 2021, the Company recorded purchase accounting adjustments that decreased goodwill recognized from the acquisition of CID Lines by $0.9 million. Purchase accounting was finalized in the second quarter of 2021 and no further purchase accounting adjustments will be recorded for the CID Lines acquisition.

Dispositions

There were no business dispositions during the first nine months of 2021.

In the second quarter of 2020, the Company completed the sale of Holchem, a U.K.-based supplier of hygiene and cleaning products and services for the food and beverage, foodservice and hospitality industries for total consideration of $106.6 million. Consideration consisted of $55.4 million of cash and $51.2 million in notes receivable recorded at fair value. After the recognition of transaction costs, the Company recognized an after-tax loss of $16.3 million, which is classified within special (gains) and charges on the Consolidated Statements of Income. Annual sales of Holchem were approximately $55 million and were included in the Global Industrial reportable segment prior to disposition. Further information related to the Company’s special (gains) and charges is included in Note 2.

As discussed in Note 4, the ChampionX separation met the criteria to be reported as discontinued operations. No other dispositions were significant to the Company’s consolidated financial statements for the first nine months of 2020.

Subsequent Event

On October 28, 2021, Ecolab entered into an agreement to acquire Purolite Corporation for $3.7 billion, subject to certain adjustments. Purolite is a leading, fast growing global provider of high-end ion exchange resins for separation and purification solutions that are highly complementary to our current offering and critical to high quality, safe drug production and biopharma products purification in the life sciences industries. It also provides ultra-pure water solutions for critical industrial markets like microelectronics, nuclear power and food and beverage.