Acquisitions and Divestiture

12 Months Ended

Dec. 31, 2020

The Company spent $116.5 million in cash, net of cash acquired, to acquire IntelliPower in January 2020. IntelliPower designs and manufactures a broad portfolio of ruggedized solutions including uninterruptible power systems, external battery packs, power distribution units and power conditioners. IntelliPower was privately held and is headquartered in Orange, California. IntelliPower is part of EIG.

The following table represents the allocation of the aggregate purchase price for the net assets of the IntelliPower acquisition based on the estimated fair values at acquisition (in millions):


Property, plant and equipment	$	1.8
Goodwill	57.3
Other intangible assets	59.5
Deferred income taxes	(12.4)

Net working capital and other(1)	10.3
Total cash paid	$	116.5

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(1)Includes $6.4 million in accounts receivable, whose fair value, contractual cash flows and expected cash flows are approximately equal.

The amount allocated to goodwill is reflective of the benefits the Company expects to realize as IntelliPower's products and solutions broaden the Company's differentiated product offerings in the power systems and instruments sectors.

At December 31, 2020, the purchase price allocated to other intangible assets of $59.5 million consists of $9.0 million of indefinite-lived intangible trade names, which are not subject to amortization. The remaining $50.5 million of other intangible assets consists of $38.0 million of customer relationships, which are being amortized over a period of 20 years and $12.5 million of purchased technology, which is being amortized over a period of 15 years. Amortization expense for each of the next five years for the IntelliPower acquisition is expected to be $2.7 million per year.

The IntelliPower acquisition had an immaterial impact on reported net sales, net income and diluted earnings per share for the year ended December 31, 2020. Unaudited pro forma net sales, net income and diluted earnings per share for the years ended December 31, 2020 and 2019, respectively, would not have been materially different than the amounts reported.

In 2019, the Company spent $1,061.9 million in cash, net of cash acquired, to acquire Pacific Design Technologies, Inc. (“PDT”) in September 2019 and Gatan in October 2019. PDT designs and manufactures a complete range of custom-engineered, liquid cooling systems and components used in a broad set of current and next-generation commercial aerospace, defense and space platforms. Gatan is a leading manufacturer of instrumentation and software used to enhance and extend the operation and performance of electron microscopes. PDT is part of EMG and Gatan is part of EIG.

In 2020, the Company finalized the measurements of certain tangible and intangible assets and liabilities for its 2019 acquisitions, which had no material impact to the consolidated statement of income. Total consideration paid for Gatan was $938.5 million and resulted in a purchase price allocation of $472.5 million of goodwill and other intangible assets of $418.0 million. The purchase price allocated to other intangible assets consists of indefinite-lived trade names of $57.7 million, $308.8 million of customer relationships, and $51.5 million of purchased technology. The Company expects $463 million of the goodwill recorded to be tax deductible in future years.

In 2018, the Company spent $1,129.3 million in cash, net of cash acquired, to acquire FMH Aerospace (“FMH”) in January 2018, SoundCom Systems (“SoundCom”) in April 2018, Motec GmbH in June 2018, Forza Silicon Corporation (“Forza”), Telular Corporation in October 2018 and Spectro Scientific Corporation in November 2018. FMH is a provider of complex, highly-engineered solutions for the aerospace, defense and space industries. SoundCom provides design, integration, installation and support of clinical workflow and communication systems for healthcare facilities, educational institutions and corporations. SoundCom also serves as a value-added reseller for Rauland-Borg Corporation in the Midwest portion of the United States. Motec is a provider of integrated vision systems serving the high growth mobile machine vision market. Motec’s ruggedized vision products and integrated software solutions provide customers with improved operational efficiency and enhanced safety across a variety of critical mobile machine applications in transportation, agriculture, logistics and construction. Forza is a leader in the design and production of high-performance imaging sensors used in medical, defense and industrial applications. Telular is a provider of communication solutions for logistics management, tank monitoring and security applications. Spectro Scientific is a provider of machine condition monitoring solutions for critical assets in high-value industrial applications. FMH is part of EMG. SoundCom, Motec, Forza, Telular and Spectro Scientific are part of EIG.

Divestiture

The Company completed its sale of Reading Alloys to Kymera International in March 2020 for net cash proceeds of $245.3 million. The transaction resulted in a pre-tax gain of $141.0 million, recorded in Other Income (expense) in the Consolidated Statement of Income, and income tax expense of $31.4 million in connection with the sale. Reading Alloys revenue and costs were reported within the EMG segment through the date of sale.