Acquisitions and Dispositions

12 Months Ended

Dec. 31, 2016

Acquisitions and Dispositions [Abstract]

Acquisitions and Dispositions

Note 2 – Acquisitions and Dispositions

2016 Acquisition

On April 26, 2016, the Company entered into an agreement providing for the purchase of a 60 percent equity interest in Jungwoo-Mueller for approximately $20.5 million in cash.  Jungwoo-Mueller, which manufactures copper-based pipe joining products, is headquartered in Seoul, South Korea and serves markets worldwide.  This business complements the Company's existing copper fittings businesses in the Piping Systems segment and is reported in the Company's Consolidated Financial Statements one month in arrears.

2015 Acquisitions

Great Lakes Copper

On July 31, 2015, the Company entered into a Share Purchase Agreement with Great Lakes Copper, Inc. providing for the purchase of all of the outstanding shares of Great Lakes Copper Ltd. (Great Lakes) for $70.0 million in cash, including a $1.5 million post-closing working capital adjustment.  Great Lakes manufactures copper tube products in Canada.  This acquisition complements the Company's existing copper tube businesses in the Piping Systems segment.  

Sherwood Valve Products

On June 18, 2015, the Company entered into a Membership Interest Purchase Agreement with Sherwood Valve Products, LLC (Sherwood) providing for the purchase of all of the outstanding equity interests of Sherwood for $21.8 million in cash, net of a post-closing working capital adjustment.  Sherwood manufactures valves and fluid control solutions for the HVAC, refrigeration, and compressed gas markets.  The acquisition of Sherwood complements our existing compressed gas business in the Industrial Metals segment.  

Turbotec Products, Inc.

On March 30, 2015, the Company entered into a Stock Purchase Agreement with Turbotec Products, Inc. (Turbotec) providing for the purchase of all of the outstanding capital stock of Turbotec for approximately $14.1 million in cash, net of a post-closing working capital adjustment. Turbotec manufactures coaxial heat exchangers and twisted tubes for the heating, ventilation, and air-conditioning (HVAC), geothermal, refrigeration, swimming pool heat pump, marine, ice machine, commercial boiler, and heat reclamation markets.  The acquisition of Turbotec complements the Company's existing refrigeration business, a component of the Climate segment.

2014 Acquisition

Yorkshire Copper Tube

On February 28, 2014, the Company entered into a definitive agreement with KME Yorkshire Limited to acquire certain assets and assume certain liabilities of its copper tube business.  Yorkshire Copper Tube (Yorkshire) produces European standard copper distribution tubes.   The purchase price was approximately $30.1 million, paid in cash.  The acquisition of Yorkshire complements the Company's existing copper tube businesses in the Piping Systems segment.  

These acquisitions were accounted for using the acquisition method of accounting whereby the total purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on respective fair values.

The following table summarizes the allocation of the purchase price to acquire these businesses, which was financed by available cash balances, as well as the assets acquired and liabilities assumed at the respective acquisition dates.  The purchase price allocation for Jungwoo-Mueller is provisional as of December 31, 2016 and subject to change upon completion of the final valuation of the long-lived assets during the measurement period.  During 2016, the valuation of the Great Lakes acquisition was finalized and a deferred tax liability of $4.1 million was recorded that resulted from a basis difference in the long-lived assets acquired.  This resulted in an increase in goodwill.

(in thousands)	Jungwoo-Mueller		Great Lakes			Sherwood			Turbotec		Yorkshire
Total consideration	$	20,533	$	70,011		$	21,795		$	14,138	$	30,137
Allocated to:
Accounts receivable		5,551		26,079			6,490			1,936		—
Inventories		17,616		15,233			11,892			3,247		17,579
Other current assets		1,437		22			260			72		1,034
Property, plant, and equipment		24,191		22,771			10,327			9,080		2,103
Goodwill		442		23,208	(1)		—			2,088		8,075	(1)
Intangible assets		756		27,468			(38	)		880		16,937
Other assets		58		1,413			—			59		—
Total assets acquired		50,051		116,194			28,931			17,362		45,728
Accounts payable		7,252		36,026			6,022			1,603		10,188
Accrued wages & other employee costs		—		—			471			356		1,167
Other current liabilities		577		381			487			51		4,236
Long-term debt		8,659		—			—			—		—
Pension and other postretirement liabilities		799		5,655			—			—		—
Other noncurrent liabilities		582		4,121			156			1,214		—
Total liabilities assumed		17,869		46,183			7,136			3,224		15,591
Noncontrolling interest		11,649		—			—			—		—
Net assets acquired	$	20,533	$	70,011		$	21,795		$	14,138	$	30,137
(1) Tax-deductible goodwill

The fair value of the noncontrolling interest at Jungwoo-Mueller was determined based on the proportionate share of consideration transferred and adjusted for lack of control and marketability based on the average of the classic put option model and the Finnerty Formula.

The following details the total intangible assets identified in the allocation of the purchase price at the respective acquisition dates:

(in thousands)	Estimated Useful Life	Jungwoo-Mueller		Great Lakes			Turbotec		Yorkshire
Intangible asset type:
Customer relationships	20 years	$	—	$	20,273		$	350	$	10,699
Non-compete agreements	3-5 years		—		2,269			90		4,504
Patents and technology	10-15 years		756		3,104			220		—
Trade names and licenses	5-10 years		—		2,453			220		1,055
Other	2-5 years		—		(631	)		—		679
Total intangible assets		$	756	$	27,468		$	880	$	16,937

2015 Disposition

On June 1, 2015, the Company sold certain assets.  Simultaneously, the Company entered into a lease agreement with the purchaser of the assets for their continued use for a period of approximately 22 months (Lease Period).

The total sales price was $20.2 million, of which $5.0 million was received on June 1, 2015 and $5.0 million was received on December 30, 2016; the remaining $10.2 million will be received at the end of the Lease Period.  This transaction resulted in a pre-tax gain of $15.4 million in the second quarter of 2015, or 17 cents per diluted share after tax.  This gain was recognized in the Piping Systems segment.

The net book value of the assets disposed was $2.3 million.  For goodwill testing purposes, these assets were part of the Domestic Piping Systems (DPS) reporting unit, which is a component of the Company's Piping Systems segment.  Because these assets met the definition of a business, $2.4 million of the DPS reporting unit's goodwill balance was allocated to the disposal group based on the relative fair values of the asset group that was disposed and the portion of the DPS reporting unit that was retained.

2014 Dispositions

On November 21, 2014, the Company entered into a Share Purchase Agreement with Travis Perkins PLC to sell all of the outstanding capital stock of Mueller Primaflow Limited (Primaflow), the Company's United Kingdom based plumbing and heating systems import distribution business, for approximately $24.9 million.  Primaflow, which serves markets in the United Kingdom and Ireland, was included in the Piping Systems segment and reported net sales of $57.5 million and after-tax net income of $4.4 million for the 2014 fiscal year.  The carrying value of the assets disposed totaled $25.3 million, consisting primarily of accounts receivable and inventories.  The carrying value of the liabilities disposed totaled $7.1 million, consisting primarily of accounts payable and other current liabilities.  In addition, the Company recognized a cumulative translation loss of $6.0 million.  The net gain on the sale of this business was immaterial to the Consolidated Financial Statements.

During November 2014, the Company sold its ABS plastic pipe manufacturing assets.  These assets had a carrying value of approximately $1.9 million and were part of the DPS reporting unit, which is a component of the Piping Systems segment.  The sales price was $6.0 million, which resulted in a pre-tax gain of $4.1 million.