Acquisitions and Divestitures

9 Months Ended

Sep. 30, 2019

Acquisitions

The Company's acquisitions of businesses totaled $642,468, net of cash acquired, during the nine months ended September 30, 2019. The businesses acquired included Hennig Fahrzeugteile Group ("Hennig"), PartsPoint Group and several bolt-on acquisitions in the Automotive Parts Group and Axis New England, Axis New York and Inenco in the Industrial Parts Group.

The Company acquired the remaining 65% equity investment in Inenco in July 2019. Inenco is one of Australasia's leading industrial distributors of key product categories such as bearings, power transmission and seals and it generates estimated annual revenues of approximately $400,000. Prior to the 65% acquisition, the Company accounted for its 35% investment under the

equity method of accounting. The acquisition-date fair value of the 35% investment was $123,385 and is included in the measurement of the consideration transferred. The difference between the acquisition-date fair value and the carrying amount of the equity method investment resulted in the recognition of a gain of $38,663 on the acquisition date. The acquisition-date fair value was determined using a market and income approach with the assistance of a third party valuation firm. The gain is included in the line item "other" within non-operating (income) expenses on the condensed consolidated statement of income and comprehensive income for the period ended September 30, 2019.

The acquisition date fair value of the consideration transferred for the aggregate of the acquired businesses was approximately $765,853, net of cash acquired of $12,149, which consisted of the following:



	September 30, 2019
Cash	$	642,468
Fair value of 35% investment in Inenco held prior to business combination	123,385
Total	$	765,853

The following table summarizes the preliminary, estimated fair values of the assets acquired and liabilities assumed at the acquisition dates for the aggregate of these businesses. Additional adjustments may be made to the acquisition accounting during the measurement period primarily related to intangible asset revaluations and tax accounting.



	September 30, 2019
Trade accounts receivable	$	127,823
Merchandise inventories	281,764
Prepaid expenses and other current assets	11,066
Intangible assets	318,301
Deferred tax assets	1,046
Property and equipment	60,313
Operating lease assets	96,845
Other assets	40,840
Total identifiable assets acquired	937,998
Current liabilities	101,564
Long-term debt	150,879
Operating lease liabilities	96,371
Deferred tax liabilities	58,903
Other long-term liabilities	97,407
Total liabilities assumed	505,124
Net identifiable assets acquired	432,874
Goodwill	332,979
Net assets acquired	$	765,853

The acquired intangible assets of approximately $318,301 were provisionally assigned to customer relationships of $281,804, trademarks of $34,207, and other intangibles of $2,290 with weighted average amortization lives of 16.8, 21.3, and 5.0 years, respectively, for a total weighted average amortization life of 17.2 years. The fair value of the acquired identifiable intangible assets is provisional pending completion of the final valuations for these assets.

The estimated goodwill recognized as part of the acquisitions is generally not tax deductible. $174,048 of goodwill has been assigned to the automotive segment and $158,931 has been assigned to the industrial segment. The goodwill is attributable primarily to the expected synergies and assembled workforces of the acquired businesses.

Divestitures

Grupo Auto Todo

On March 7, 2019, the Company sold all of its equity in Grupo Auto Todo, a Mexican subsidiary within the Automotive Parts Group. Grupo Auto Todo contributed approximately $93,000 of revenues for the year ended December 31, 2018. Proceeds from the transaction of $12,028 are included in proceeds from divestitures on the condensed consolidated statement of cash flows for the nine months ended September 30, 2019. The Company incurred realized currency losses of $27,037 from this transaction during the nine months ended September 30, 2019. These losses are included in the line item "other" within non-operating (income) expenses on the condensed consolidated statements of income and comprehensive income.

EIS

During the third quarter of 2019, the Company approved a transaction to sell EIS, a wholly owned subsidiary within the Industrial Parts Group. The transaction closed on September 30, 2019. EIS contributed approximately $817,249 of revenue for the year ended December 31, 2018 and $588,031 for the nine months ended September 30, 2019. Proceeds from the transaction of $365,876 are included in proceeds from divestitures on the condensed consolidated statement of cash flows for the nine months ended September 30, 2019. The Company incurred realized currency losses of $7,664 from this transaction, which are included in the line item "other" within non-operating (income) expenses on the condensed consolidated statement of income for the three and nine months ended September 30, 2019. This divestiture is not considered a strategic shift that will have a major effect on the Company’s operations or financial results; therefore, it is not reported as discontinued operations.