Acquisitions and Divestitures

9 Months Ended

Jun. 30, 2021

Acquisitions and Divestitures

Silent-Aire Acquisition

On May 12, 2021, the Company completed its acquisition of Silent-Aire, a global leader in hyperscale data center cooling and modular critical infrastructure solutions, for approximately $751 million, net of cash acquired, which is comprised of an upfront net cash payment of approximately $661 million and the estimated fair value of contingent earn-out liabilities of approximately $90 million. The contingent earn-out liabilities are based upon the achievement of certain defined operating results in each of the three years following the acquisition, with a maximum payout of approximately $250 million. The fair value of contingent earn-out liabilities is reassessed on a quarterly basis and could differ materially from the initial estimates. Subsequent changes in the estimated fair value of contingent earn-out liabilities will be recorded in the consolidated statements of income when incurred. The earn-out payments that are less than or equal to the contingent earn-out liabilities on the acquisition date are reflected as financing cash outflows and amounts paid in excess of the contingent earn-out liabilities on the acquisition date are reflected as operating cash outflows. The Silent-Aire business is reported within the Global Products segment.

In connection with the acquisition, the Company recorded goodwill of $235 million in the Global Products segment. Goodwill is attributable primarily to expected synergies, expanded market opportunities and other benefits that the Company believes will result from combining its operations with the operations of Silent-Aire. The goodwill created in the acquisition is not deductible for tax purposes and is subject to change as the purchase price allocation is completed.

The preliminary fair values of the assets acquired and liabilities assumed related to Silent-Aire are as follows (in millions):


Cash and cash equivalents	$	5
Accounts receivable	141
Inventories	61
Other current assets	3
Property, plant, and equipment - net	33
Goodwill	235
Intangible assets - net	499
Other noncurrent assets	83
Total assets acquired	$	1,060

Accounts payable	62
Accrued compensation and benefits	5
Deferred revenue	32
Other current liabilities	10
Other noncurrent liabilities	195
Total liabilities acquired	$	304
Net assets acquired	$	756

The preliminary purchase price allocation to identifiable intangible assets acquired related to Silent-Aire are as follows:



	Preliminary Fair Value (in millions)		Weighted Average Life (in years)
Customer relationships	$	275	19
Technology	126		13
Other definite-lived intangibles	21		1
Indefinite-lived trademarks	77
Total identifiable intangible assets	$	499

The purchase price allocations may be subsequently adjusted to reflect final valuation studies.

Other acquisitions and divestitures

During the first nine months of fiscal 2021, the Company completed certain additional acquisitions for a combined purchase price, net of cash acquired, of $58 million, of which $46 million was paid as of June 30, 2021. In connection with the acquisitions, the Company recorded goodwill of $21 million within the Building Solutions EMEA/LA segment and $17 million within the Building Solutions North America segment.

During the first nine months of fiscal 2021, the Company completed certain divestitures within the Buildings Solutions Asia Pacific segment. The combined selling price was $27 million, of which $19 million was received as of June 30, 2021. In connection with the divestitures, the Company reduced goodwill by $7 million.

During the first nine months of fiscal 2020, the Company completed certain acquisitions for a combined purchase price, net of cash acquired, of $63 million, of which $59 million was paid as of June 30, 2020. In connection with the acquisitions, the Company recorded goodwill of $19 million within the Global Products segment and $23 million within the Building Solutions EMEA/LA segment.

Acquisitions and divestitures were not material to the Company's consolidated financial statements in the first nine months of fiscal 2021 or 2020.