Acquisitions

12 Months Ended

Dec. 26, 2020

2020 Acquisitions

Kessler

On August 3, 2020, the Company entered into an asset purchase agreement with Wieland-Kessler LLC, whereby the Company purchased the Kessler distribution business, which included inventory, manufacturing equipment, and related assets. The total purchase price was $57.2 million in cash paid at closing. The Company treated this as a business combination. The acquired business, Kessler Sales and Distribution, LLC (Kessler), is a distributor of residential and commercial plumbing products. It is reported within and complements the Company’s existing businesses in the Piping Systems segment. For the year ended December 26, 2020, the Company’s total net sales included $55.0 million of revenue recognized by Kessler from the date of acquisition.

Shoals

On January 17, 2020, the Company entered into a stock purchase agreement pursuant to which the Company acquired all of the outstanding stock of Shoals Tubular, Inc. (Shoals) for approximately $15.4 million in cash at closing, net of working capital adjustments. Shoals is a manufacturer of brazed manifolds, headers, and distributor assemblies used primarily by manufacturers of residential heating and air conditioning units. The acquired business is reported within and complements the Company’s existing businesses in the Climate segment.

2018 Acquisitions

ATCO

On July 2, 2018, the Company entered into a stock purchase agreement pursuant to which the Company acquired all of the outstanding capital stock of ATCO Rubber Products, Inc. (ATCO) for approximately $158.1 million, net of working capital adjustments. The total purchase price consisted of $151.8 million in cash at closing and a contingent consideration arrangement which requires the Company to pay the former owner up to $12.0 million based on EBITDA growth of the acquired business. ATCO is an industry leader in the manufacturing and distribution of insulated HVAC flexible duct systems and will support the Company’s strategy to grow its Climate Products businesses to become a more valuable resource to its HVAC customers. The acquired business is reported in the Company’s Climate segment.

For the years ended December 26, 2020 and December 28, 2019, ATCO had net sales of approximately $196.5 million and $190.1 million, respectively. For the year ended December 29, 2018, the Company’s total net sales included $90.0 million of revenue recognized by ATCO from the date of acquisition.

The following table presents condensed pro forma consolidated results of operations as if the ATCO acquisition has occurred at the beginning of 2018. The pro forma information does not purport to be indicative of the results that would have been obtained if the operations had actually been combined during the periods presented and is not necessarily indicative of operating results to be expected in future periods. The most significant pro forma adjustments to the historical results of operations relate to the application of purchase accounting and the financing structure.


	For the Year Ended
(In thousands, except per share data)	2018

Net sales	$	2,595,454
Net income	111,482

Basic earnings per share	$	1.96
Diluted earnings per share	1.95

Die-Mold

On March 31, 2018, the Company entered into a share purchase agreement pursuant to which the Company acquired all of the outstanding shares of Die-Mold Tool Limited (Die-Mold) for approximately $13.6 million, net of working capital adjustments. The total purchase price consisted of $12.4 million in cash at closing and a contingent consideration arrangement which requires the Company to pay the former owner up to $2.3 million based on EBITDA growth of the acquired business. Die-Mold, based out of Ontario, Canada, is a manufacturer of plastic PEX and other plumbing-related fittings and an integrated designer and manufacturer of plastic injection tooling. The business complements the Company’s existing businesses within the Piping Systems segment.

Purchase Price Allocations

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 were financed by available cash balances, as well as the assets acquired and liabilities assumed at the respective acquisition dates. The purchase price allocations for Kessler and Shoals are provisional as of December 26, 2020 and subject to change upon the completion of the final valuation of long-lived assets during the measurement period.


(In thousands)	Kessler			Shoals			ATCO			Die-Mold

Total consideration	$	57,233		$	15,415		$	158,100		$	13,629

Allocated to:
Accounts receivable	—			660			21,829			1,684
Inventories	25,106			1,809			31,666			1,833
Other current assets	—			26			1,051			267
Property, plant, and equipment	3,561			3,700			83,080			3,278
Operating lease right-of-use assets	10,526			—			—			—
Goodwill	11,710		(1)	1,964		(1)	17,236		(1)	4,239
Intangible assets	15,140			7,480			23,360			5,209
Other assets	—			—			224			—
Total assets acquired	66,043			15,639			178,446			16,510

Accounts payable	—			217			8,093			710
Current portion of operating lease liabilities	1,692			—			—			—
Other current liabilities	—			7			10,187			173
Long-term debt	—			—			2,066			—
Noncurrent operating lease liabilities	7,118			—			—			—
Other noncurrent liabilities	—			—			—			1,998
Total liabilities assumed	8,810			224			20,346			2,881



Net assets acquired	57,233			15,415			$	158,100		$	13,629

(1) Tax-deductible goodwill

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	Kessler		Shoals		ATCO		Die-Mold

Intangible asset type:
Customer relationships	20 years	$	11,180	$	4,290	$	6,550	$	3,077
Non-compete agreements	3-5 years	—		150		—		70
Patents and technology	10-15 years	—		2,620		10,570		1,512
Trade names, licenses, and other	5-10 years	3,960		420		4,770		550
Supply contracts	5 years	—		—		1,470		—


Total intangible assets		$	15,140	$	7,480	$	23,360	$	5,209