Acquisitions and Discontinued Operations

Acquisitions

In January 2019, as part of Filtration Solutions, we entered into definitive agreements to acquire Aquion Inc. (“Aquion”) and Pelican Water Systems (“Pelican”) for $160.0 million and $120.0 million in cash, respectively, and subject to certain customary adjustments. We completed the Aquion acquisition on February 13, 2019 and the Pelican acquisition on February 12, 2019.

Aquion offers a diverse line of water conditioners, water filters, drinking-water purifiers, ozone and ultraviolet disinfection systems, reverse osmosis systems and acid neutralizers for the residential and commercial water treatment industry. Pelican Water Systems provides residential whole home water treatment systems. These acquisitions are not expected to have a material impact on our consolidated financial position, results of operations or cash flows.

During 2017, our continuing operations completed acquisitions with purchase prices totaling $45.9 million in cash, net of cash acquired. Identifiable intangible assets acquired included $19.1 million of definite-lived customer relationships with an estimated useful life of 11 years.

In November 2016, our continuing operations completed an acquisition with a purchase price of $25.0 million in cash, net of cash acquired.

The pro forma impact of these acquisitions was not material.

Discontinued Operations

Electrical separation

On April 30, 2018, we completed the Separation and Distribution. The results of the Electrical business have been presented as discontinued operations and the related assets and liabilities were reclassified as held for sale for all periods presented. The Electrical business had been previously disclosed as a stand-alone reporting segment. Separation costs related to the Separation and Distribution were $84.2 million and $39.3 million for the twelve months ended December 31, 2018 and 2017, respectively. These costs are reported in discontinued operations as they represent a cost directly related to the Separation and Distribution and were included within Income from discontinued operations, net of tax presented below.

There were no separation costs related to the Separation and Distribution for the twelve months ended December 31, 2016.

Sale of Valves & Controls

On April 28, 2017, we completed the sale of the Valves & Controls business to Emerson Electric Co. for $3.15 billion in cash. The sale resulted in a gain of $181.1 million, net of tax. The results of the Valves & Controls business have been presented as discontinued operations. The Valves & Controls business was previously disclosed as a stand-alone reporting segment. Transaction costs of $56.4 million related to the sale of Valves & Controls were incurred during the year ended December 31, 2017 and were recorded within Gain from sale/impairment of discontinued operations before income taxes presented below.

Operating results of discontinued operations are summarized below:



	Years ended December 31
In millions	2018		2017			2016
Net sales	$	693.9	$	2,548.2		$	3,755.4
Cost of goods sold	424.0		1,596.2			2,457.1
Gross profit	269.9		952.0			1,298.3
Selling, general and administrative	237.8		589.2			803.2
Research and development	14.6		48.3			59.0
Operating income	$	17.5	$	314.5		$	436.1

Income from discontinued operations before income taxes	$	31.8	$	317.1		$	418.5
Income tax provision (benefit)	6.1		(54.2		)	75.1
Income from discontinued operations, net of tax	$	25.7	$	371.3		$	343.4

Gain from sale / impairment of discontinued operations before income taxes	$	—	$	183.5		$	0.6
Provision for income taxes	—		2.4			—
Gain from sale / impairment of discontinued operations, net of tax	$	—	$	181.1		$	0.6

The carrying amounts of major classes of assets and liabilities that were classified as held for sale on the Consolidated Balance Sheets were as follows:



	December 31
In millions	2017
Cash and cash equivalents	$	27.0
Accounts receivable, net	348.5
Inventories	224.1
Other current assets	108.4
Current assets held for sale	$	708.0
Property, plant and equipment, net	$	265.8
Goodwill	2,238.2
Intangibles, net	1,236.6
Other non-current assets	249.0
Non-current assets held for sale	$	3,989.6
Accounts payable	$	174.1
Employee compensation and benefits	70.8
Other current liabilities	115.9
Current liabilities held for sale	$	360.8
Pension and other post-retirement compensation and benefits	$	189.2
Deferred tax liabilities	286.2
Other non-current liabilities	61.6
Non-current liabilities held for sale	$	537.0