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Acquisitions and Divestitures | 9 Months Ended
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Sep. 30, 2021
Business Combinations and Dispositions [Abstract] |
Acquisitions and Divestitures | Acquisitions and Divestitures All of the Company’s acquisitions of businesses have been accounted for under Accounting Standards Codification (“ASC”) 805, Business Combinations. Accordingly, the accounts of the acquired companies, after adjustments to reflect the fair values assigned to assets and liabilities, have been included in the Company’s Condensed Consolidated Financial Statements from their respective dates of acquisition. The results of operations associated with the acquisitions of ABEL Pumps, L.P. and certain of its affiliates (“ABEL”) and Airtech Group, Inc., US Valve Corporation and related entities (“Airtech”) have been included in the Company’s condensed consolidated results since the dates of acquisition on March 10, 2021 and June 14, 2021, respectively. The Company incurred acquisition-related transaction costs of $0.7 million and $1.3 million in the three months ended September 30, 2021 and 2020, respectively, and $4.4 million and $3.1 million in the nine months ended September 30, 2021 and 2020, respectively. These costs were recorded in Selling, general and administrative expenses and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company recorded a $2.5 million fair value inventory step-up charge associated with the completed 2021 acquisition of ABEL in Cost of sales during the nine months ended September 30, 2021 and a $9.1 million fair value inventory step-up charge associated with the completed 2021 acquisition of Airtech in Cost of sales during the three and nine months ended September 30, 2021. The Company also recorded a $4.1 million fair value inventory step-up charge associated with the completed 2020 acquisition of Flow Management Devices, LLC (“Flow MD”) in Cost of sales during the nine months ended September 30, 2020. 2021 Acquisitions On March 10, 2021, the Company acquired the stock of ABEL. ABEL designs and manufactures highly engineered reciprocating positive displacement pumps for a variety of end markets, including mining, marine, power, water, wastewater and other general industries. Headquartered in Büchen, Germany, with sales and service locations in Madrid, Spain and Pittsburgh, Pennsylvania, ABEL operates in the Company’s Pumps reporting unit within the Fluid & Metering Technologies (“FMT”) segment. ABEL was acquired for cash consideration of $106.3 million. The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $59.5 million and $46.0 million, respectively. The goodwill is not deductible for tax purposes. The Company made an initial allocation of the purchase price for the ABEL acquisition as of the acquisition date based on its understanding of the fair value of the acquired assets and assumed liabilities. These nonrecurring fair value measurements are classified as Level 3 in the fair value hierarchy. As the Company continues to obtain additional information about these assets and liabilities, including intangible asset appraisals, inventory valuation and accrued expenses, and continues to integrate the newly acquired business, the Company will refine the estimates of fair value and more accurately allocate the purchase price. Only items identified as of the acquisition date are considered for subsequent adjustment. The Company will continue to make required adjustments to the purchase price allocation prior to the completion of the measurement period. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:
(In thousands) | Total
Current assets, net of cash acquired | $ | 18,419 |
Property, plant and equipment | 4,034 |
Goodwill | 59,481 |
Intangible assets | 46,000 |
Other noncurrent assets | 123 |
Total assets acquired | 128,057 |
Current liabilities | (7,100) |
Deferred income taxes | (14,537) |
Other noncurrent liabilities | (84) |
Net assets acquired | $ | 106,336 |
Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The goodwill recorded for the acquisition reflects the strategic fit, revenue and earnings growth potential of this business. The acquired intangible assets and weighted average amortization periods are as follows:
(In thousands, except weighted average life) | Total |  | Weighted Average Life
Trade names | $ | 9,000 |  |  | 15
Customer relationships | 30,000 |  |  | 13
Unpatented technology | 7,000 |  |  | 11
Acquired intangible assets | $ | 46,000 |  |  |
On June 14, 2021, the Company acquired the stock of Airtech. Airtech designs and manufactures a wide range of highly-engineered pressure technology products, including vacuum pumps, regenerative blowers, compressor systems and valves for a variety of end markets, including alternative energy, food processing, medical, packaging and transportation. Headquartered in Rutherford, New Jersey, with manufacturing operations in Werneck, Germany and Shenzhen, China, Airtech operates in the Company’s Performance Pneumatic Technologies reporting unit within the Health & Science Technologies (“HST”) segment. Airtech was acquired for cash consideration of $471.0 million. The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $271.3 million and $201.3 million, respectively. The goodwill is not deductible for tax purposes. The Company made an initial allocation of the purchase price for the Airtech acquisition as of the acquisition date based on its understanding of the fair value of the acquired assets and assumed liabilities. These nonrecurring fair value measurements are classified as Level 3 in the fair value hierarchy. As the Company continues to obtain additional information about these assets and liabilities, including intangible asset appraisals, inventory valuation and accrued expenses, and continues to integrate the newly acquired business, the Company will refine the estimates of fair value and more accurately allocate the purchase price. Only items identified as of the acquisition date are considered for subsequent adjustment. The Company will continue to make required adjustments to the purchase price allocation prior to the completion of the measurement period. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:
(In thousands) | Total
Current assets, net of cash acquired | $ | 44,152 |
Property, plant and equipment | 4,803 |
Goodwill | 271,268 |
Intangible assets | 201,300 |
Other noncurrent assets | 10,136 |
Total assets acquired | 531,659 |
Current liabilities | (10,065) |
Deferred income taxes | (42,141) |
Other noncurrent liabilities | (8,436) |
Net assets acquired(1) | $ | 471,017 |
(1) Subsequent to June 30, 2021, the Company finalized its working capital adjustment for the acquisition of the Airtech business, resulting in a $1.7 million adjustment to the purchase price. This amount was accrued as of September 30, 2021 and was paid in October 2021. Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The goodwill recorded for the acquisition reflects the strategic fit, revenue and earnings growth potential of this business. The acquired intangible assets and weighted average amortization periods are as follows:
(In thousands, except weighted average life) | Total |  | Weighted Average Life
Trade names | $ | 15,400 |  |  | 15
Customer relationships | 161,900 |  |  | 13
Unpatented technology | 24,000 |  |  | 11
Acquired intangible assets | $ | 201,300 |  |  |
2020 Acquisitions On February 28, 2020, the Company acquired the membership interests of Flow MD, a privately held provider of flow measurement systems that ensure custody transfer accuracy in the oil and gas industry. Flow MD engineers and manufactures small volume provers. Headquartered in Phoenix, AZ, with operations in Houston, TX and Pittsburgh, PA, Flow MD operates in the Company’s Energy reporting unit within the FMT segment. Flow MD was acquired for cash consideration of $121.2 million. The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $60.0 million and $53.0 million, respectively. The goodwill is deductible for tax purposes. The Company finalized the allocation of the purchase price for the Flow MD acquisition as of the acquisition date based on its understanding of the fair value of the acquired assets and assumed liabilities. These nonrecurring fair value measurements are classified as Level 3 in the fair value hierarchy. The final allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:
(In thousands) | Total
Current assets, net of cash acquired | $ | 32,858 |
Property, plant and equipment | 4,166 |
Goodwill | 60,026 |
Intangible assets | 53,000 |
Other noncurrent assets | 1,344 |
Total assets acquired | 151,394 |
Current liabilities | (32,291) |
Deferred income taxes | 2,459 |
Other noncurrent liabilities | (329) |
Net assets acquired (1) | $ | 121,233 |
(1) Subsequent to September 30, 2020, the Company obtained additional information about the assets and liabilities acquired that required a $3.1 million adjustment to the purchase price of the Flow MD business. Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The goodwill recorded for the acquisition reflects the strategic fit, revenue and earnings growth potential of this business. The acquired intangible assets and weighted average amortization periods are as follows:
(In thousands, except weighted average life) | Total |  | Weighted Average Life
Trade names | $ | 6,000 |  |  | 15
Customer relationships | 31,500 |  |  | 10
Unpatented technology | 15,500 |  |  | 20
Acquired intangible assets | $ | 53,000 |  |  |
On November 23, 2020, the Company acquired Qualtek Manufacturing, Inc. (“Qualtek”), a manufacturer of high quality specialty metal components and parts by providing vertically integrated tool and die, metal stamping and metal finishing services. Headquartered in Colorado Springs, CO, Qualtek operates in the Company’s BAND-IT reporting unit within the Fire & Safety/Diversified Products (“FSDP”) segment. Qualtek was acquired for cash consideration of $1.9 million. The entire purchase price was funded with cash on hand. Goodwill recognized as part of this transaction was $1.1 million. The goodwill recorded for the acquisition reflects the strategic fit, revenue and earnings growth potential of this business. The goodwill is deductible for tax purposes. The Company finalized its allocation of the purchase price for the Qualtek acquisition as of the acquisition date based on its understanding of the fair value of the acquired assets. These nonrecurring fair value measurements are classified as Level 3 in the fair value hierarchy. Divestitures The Company periodically reviews its operations for businesses which may no longer be aligned with its strategic objectives and focuses on core business and customers. Any resulting gain or loss recognized due to divestitures is recorded within Loss (gain) on sale of businesses - net within Selling, general and administrative expenses. On March 12, 2021, the Company completed the sale of CiDRA Precision Services (“CiDRA”) for $1.0 million in cash, resulting in a pre-tax gain on the sale of $0.5 million. The Company recorded $0.1 million of income tax expense associated with this transaction during the nine months ended September 30, 2021. The results of CiDRA were reported within the HST segment and generated $0.9 million of revenues in 2021 through the date of sale. The Company concluded that this divestiture did not meet the criteria for reporting the results of CiDRA as discontinued operations. There were no divestitures that took place during the nine months ended September 30, 2020.

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