ACQUISITIONS AND DISPOSITIONS

12 Months Ended

Dec. 31, 2022

ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS AND DISPOSITIONS

4. 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 based on estimates of the fair value of assets acquired, liabilities assumed and noncontrolling interests acquired as of the acquisition date. Goodwill is recognized in the amount that the purchase consideration paid exceeds the fair value of the net assets acquired. Purchase consideration includes both cash paid and the fair value of noncash consideration exchanged, including stock and/or contingent consideration exchanged, and is reduced by the amount of cash or cash equivalents acquired. Acquisitions during 2021 and 2020 were not significant to the Company’s consolidated financial statements; therefore, pro forma financial information is not presented.

2022 Activity

No acquisitions occurred during 2022.

2021 Activity

Purolite Acquisition

On December 1, 2021, the Company acquired Purolite for total consideration of $3,706 million in cash, net of cash acquired. Purolite is a US-based business that is a leading and fast-growing global provider of resins for the separation and purification of solutions that is highly complementary to the Company’s current offering and critical to safe, high quality drug production and biopharma product purification in the life sciences industries. It also provides purification and separation solutions for critical industrial markets like microelectronics, nuclear power and food and beverage. Prior to acquisition, Purolite prepared its consolidated financial statements pursuant to the requirements of UK GAAP.

The Purolite acquisition has been accounted for as a business combination with the assets acquired and liabilities assumed recognized at fair value as of the acquisition date. The fair values of intangible assets acquired were estimated using discounted cash flow analyses appropriate in the circumstances for the nature of the assets being valued. The valuation models incorporated projections of future cash flows and other valuation assumptions. Significant inputs and assumptions used in the Company’s customer relationship intangible asset valuations include projected revenues, contributory asset charges, tax savings due to amortization, income tax rates, customer attrition rates and discount rates. Significant inputs and assumptions used in the Company’s tradename and acquired technology intangible asset valuations include projected revenues, future asset utilities, royalty rates, tax saving due to amortization, income tax rates and discount rates.

The Company incurred certain transaction and integration costs associated with the acquisition that were expensed and were recorded in the Consolidated Statements of Income. Further information related to the Company’s special (gains) and charges is included in Note 3.

Purolite purchase accounting was finalized in the fourth quarter of 2022. The following table summarizes the final value of Purolite assets acquired and liabilities assumed, net of cash acquired, as of the acquisition date:

(millions)	December 1, 2021
Tangible assets		$361.9
Identifiable intangible assets
Customer relationships		870.0
Other technologies		285.0
Trademarks		73.0
Total assets acquired		1,589.9
Goodwill		2,260.6
Total liabilities		144.8
Total consideration transferred to sellers, net of cash acquired		$3,705.7

During 2022, the Company recorded purchase accounting adjustments associated with the finalization of the purchase accounting for its acquisition of Purolite. As a result of these purchase accounting adjustments, the Company made $7.2 million of acquisition-related payments, acquisition related net tangible assets decreased by $54.0 million, definite-lived intangible assets decreased by $185.4 million and goodwill increased by $246.6 million.

Tangible assets acquired primarily consist of accounts receivable of $61.6 million, property, plant and equipment of $156.5 million and inventory of $122.4 million. Liabilities assumed primarily consist of deferred tax liabilities of $38.2 million and current liabilities of $77.6 million. Identified intangible assets primarily consist of customer relationships, acquired technologies, and trade names and are being amortized over weighted average lives of 17, 14, and 5 years, respectively, with a weighted average life of 15 years.

Goodwill of $2,260.6 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 Life Sciences businesses. Purolite became part of the Global Healthcare & Life Sciences reportable segment. Goodwill of $2,146.3 million is deductible for income tax purposes.

Other Acquisitions

In December 2020, the Company acquired VanBaerle Hygiene AG (“VanBaerle”), a Switzerland-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 & Specialty reporting segment. The purchase price included immaterial amounts of holdback and contingent consideration, the remaining amounts of which were settled prior to December 31, 2022. Purchase accounting was finalized in the fourth quarter of 2021.

In February 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 settled prior to December 31, 2021. Purchase accounting was finalized in the first quarter of 2022.

In July 2021, the Company acquired National Wiper Alliance, Inc. (“NWA”), a U.S.-based business which sells wipes for healthcare and institutional applications. NWA became part of the Global Healthcare & Life Sciences reporting segment. Purchase accounting was finalized in the third quarter of 2022.

In September 2021, the Company acquired EPN Water Col, Ltd. (“EPN”), a South Korean-based business which sells chemical products and manages installations at water treatment chemical injection facilities. EPN became part of the Global Industrial reporting segment. Purchase accounting was finalized in the fourth quarter of 2022.

The goodwill related to the acquisitions of VanBaerle, TechTex, or EPN is not tax deductible, whereas the goodwill arising from the acquisition of NWA is tax deductible.

2020 Activity

CID Lines Acquisition

On May 11, 2020, the Company acquired CID Lines for total consideration of $506.9 million in cash, net of cash acquired. CID Lines, a Belgian-based business is a leading global provider of livestock biosecurity and hygiene solutions.

The CID Lines acquisition has been accounted for as a business combination with the assets acquired and liabilities assumed recognized at fair value as of the acquisition date. The Company incurred certain transaction and integration costs associated with the acquisition that were expensed and recorded in the Consolidated Statements of Income. Further information related to the Company’s special (gains) and charges is included in Note 3.

CID Lines purchase accounting was finalized in the second quarter of 2021. The following table summarizes the final value of CID Lines assets acquired and liabilities assumed, net of cash acquired, as of the acquisition date:

(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
Total consideration transferred to sellers, net of cash acquired		$485.5

Tangible assets acquired primarily consist of accounts receivable of $30.1 million, property, plant and equipment of $7.7 million and inventory of $16.3 million. Liabilities assumed primarily consist of deferred tax liabilities of $64.8 million and current liabilities of $32.4 million. Identified intangible assets primarily consist of customer relationships, trademarks, and acquired technology and product registrations and are being amortized over weighted average lives of 14, 14, and 16 years, respectively, with a weighted average life of 14 years.

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 from the acquisition is expected to be deductible for income tax purposes.

During 2021, the Company recorded purchase accounting adjustments associated with the finalization of the purchase accounting for its acquisition of CID Lines. As a result of these adjustments, the Company decreased goodwill recognized from the acquisition of CID Lines by $0.9 million.

Acquisitions

The components of the cash paid for other acquisitions, excluding the Purolite and CID Lines acquisitions (as further disclosed above), for 2022, 2021 and 2020, are shown in the following table:

(millions)	2022		2021		2020
Net tangible assets acquired		$-		$3.6		$-
Identifiable intangible assets
Customer relationships		-		75.0		-
Trademarks		-		4.7		-
Non-compete agreements		-		3.0		-
Other technologies		-		1.5		-
Total intangible assets		-		84.2		-
Goodwill		-		140.6		-
Total aggregate purchase price		-		228.4		-
Acquisition-related liabilities and contingent consideration (a)		-		(4.4)		-
Total cash paid for acquisitions, including acquisition-related
liabilities and contingent consideration, net of cash acquired		$-		$224.0		$-

(a)Subsequent to the acquisitions, $1.4 in contingent consideration was remitted to the seller during 2021 and is included in investing activities on the Consolidated Statement of Cash Flows.

During 2022, the Company recorded purchase accounting adjustments associated with the finalization of the purchase accounting for its acquisitions of TechTex, NWA and EPN. As a result of these purchase accounting adjustments, acquisition related net tangible assets decreased by $1.6 million, definite-lived intangible assets decreased by $5.6 million, and goodwill increased by $7.2 million.

The weighted average useful lives of definite-lived intangible assets acquired from other acquisitions were 13 years for acquisitions completed in 2021.

Dispositions

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 the receipt of notes valued at $51.2 million from the acquirer. In the fourth quarter of 2020, all outstanding principal and interest on the notes was paid by the acquirer. After the recognition of transaction costs, the Company recognized an after-tax loss of $12.8 million, which was classified within special charges in the Consolidated Statements of Income. Holchem was included in the Global Industrial reportable segment prior to disposition.

As discussed in Note 5, 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 2022, 2021 or 2020.