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ACQUISITIONS | 6 Months Ended
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Jun. 30, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
ACQUISITIONS | ACQUISITIONS Acquisitions are recorded using the acquisition method of accounting in accordance with ASC 805, Business Combinations. As a result, the aggregate purchase price has been allocated to assets acquired and liabilities assumed based on the estimate of fair market value of such assets and liabilities at the date of acquisition. Viessmann Climate Solutions On January 2, 2024, the Company completed the acquisition of the VCS Business from Viessmann for total consideration of $14.2 billion. The purchase price consisted of (i) $11.2 billion in cash and (ii) 58,608,959 shares of the Company's common stock, subject to certain lock-up provisions and anti-dilution protection. The Company funded the cash portion of the purchase price with a combination of cash on hand, long term debt issuances and borrowings under various term facilities. The VCS Business develops intelligent, integrated and sustainable technologies, including heat pumps, boilers, photovoltaic systems, home battery storage and digital solutions, primarily for residential customers in Europe. The Company believes that secular trends in these areas will drive significant, sustained future growth. In addition, the Company anticipates realizing significant operational synergies including savings through supplier rationalization and leverage, reduced manufacturing costs and lower general and administrative costs. Longer term, the Company expects to benefit from synergies related to service revenue expansion, leverage of distribution channels and cross-selling opportunities. The components of the purchase price are as follows:
(In millions) |  | January 2, 2024
Cash |  | $ | 11,156 |
Common shares (58,608,959 shares at $51.20 per share) |  | 3,001 |
Total consideration |  | $ | 14,157 |
The allocation of the purchase price is as follows:
(In millions) |  |  |  |  |  | January 2, 2024
Cash and cash equivalents |  |  |  |  |  | $ | 393 |
Accounts receivable |  |  |  |  |  | 413 |
Inventories |  |  |  |  |  | 920 |
Other current assets |  |  |  |  |  | 17 |
Fixed assets |  |  |  |  |  | 919 |
Intangible assets |  |  |  |  |  | 6,645 |
Other assets |  |  |  |  |  | 299 |
Accounts payable |  |  |  |  |  | (290) |
Other liabilities, current |  |  |  |  |  | (663) |
Future income tax obligations |  |  |  |  |  | (1,810) |
Other liabilities |  |  |  |  |  | (301) |
Total identifiable net assets |  |  |  |  |  | 6,542 |
Goodwill |  |  |  |  |  | 7,607 |
Total consideration |  |  |  |  |  | $ | 14,149 |
The excess purchase price over the estimated fair value of the net identifiable assets acquired was recognized as goodwill and totaled $7.6 billion, which is not deductible for tax purposes. Accounts receivable and current liabilities were stated at their historical carrying value, which approximates fair value given the short-term nature of these assets and liabilities. The estimate of fair value for inventory and fixed assets was based on an assessment of the acquired assets' condition as well as an evaluation of the current market value of such assets. The Company recorded intangible assets based on its estimate of fair value which consisted of the following:
(In millions) |  | Estimated Useful Life (in years) |  | Intangible Assets Acquired
Customer relationships |  | 17 |  | $ | 4,787 |
Technology |  | 10 - 20 |  | 1,051 |
Trademark |  | 40 |  | 679 |
Backlog |  | 1 |  | 123 |
Other |  | 50 |  | 5 |
Total intangible assets acquired |  |  |  | $ | 6,645 |
The valuation of intangible assets was determined using an income approach methodology including the multi-period excess earnings method and the relief from royalty method. Key assumptions used in estimating future cash flows included projected short-term revenue growth rates, research and development expenses, EBITDA margins, income tax rates, discount rates, customer attrition rates, royalty rates, contributory asset charge and obsolescence rates among others. The projected future cash flows are discounted to present value using an appropriate discount rate. The Company finalized the process of allocating the purchase price and valuing the acquired assets and liabilities during 2024. During 2024, $40 million of acquisition-related costs were incurred, of which $7 million and $37 million was recognized during the three and six months ended June 30, 2024, respectively. These acquisition costs are reflected within Selling, general and administrative in the Condensed Consolidated Statement of Operations. The assets, liabilities and results of operations of the VCS Business were consolidated in the accompanying Condensed Consolidated Financial Statements as of the date of acquisition and reported primarily within the Company's Climate Solutions Europe segment.

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