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Business Combinations
 6 Months Ended
Jun. 30, 2017
Business Combinations [Abstract]  
Business Combinations
Business Combinations
Hudson Products Acquisition
On June 30, 2017, Chart Industries, Inc. (“Chart”) and Chart Sully Corporation, a wholly owned subsidiary of Chart (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with RCHPH Holdings, Inc. (“Hudson Products”), a privately held company based in Beasley, Texas, and R/C Hudson Holdings, L.P., solely in its capacity as the Initial Holder Representative under the Merger Agreement. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Hudson Products, with Hudson Products surviving the merger as a wholly owned subsidiary of Chart (the “Acquisition”).
The Acquisition purchase price is $410,000 on a cash-free, debt-free basis and subject to a working capital adjustment. The Acquisition will be funded by Chart’s available cash on hand and borrowings under its SSRCF.
The Merger Agreement provides for customary representations, warranties, covenants and agreements, including, among others, that each of the parties to the Merger Agreement will use commercially reasonable efforts to complete the Acquisition, that Hudson Products will conduct its business in the ordinary course consistent with past practice during the period between the execution of the Merger Agreement and consummation of the Acquisition, and that Hudson Products will not engage in certain kinds of transactions during such period.
The Merger Agreement also contains customary termination provisions, including a provision that the Merger Agreement may be terminated by either Chart or Hudson Products if the Acquisition has not been completed by March 31, 2018; provided, however, that such right to terminate the Merger Agreement is not available to any party whose breach of any provision of the Merger Agreement results in the failure of the Acquisition to be completed. The completion of the Acquisition is subject to the satisfaction of certain customary closing conditions, including, among other things, the expiration or termination of waiting periods under the Hart-Scott-Rodino Antitrust Improvement Act of 1976. The Acquisition has been approved by the shareholders of Hudson Products pursuant to a written consent delivered to Hudson Products and Chart.
The Acquisition is expected to be completed in the third quarter of 2017 and will be included in the Company’s Energy & Chemicals (“E&C”) segment.
Other than with respect to the Acquisition as described herein, there are no material relationships between Chart or its affiliates and Hudson Products.
For further details regarding the Acquisition, see the Company’s Current Report on Form 8-K, dated June 30, 2017.
Hetsco, Inc. Acquisition
On January 13, 2017, the Company acquired 100% of the equity interests in Hetsco, Inc. from Global Power Equipment Group, Inc. for an estimated purchase price of $23,162, which was paid upon closing. The purchase price allocation reported at March 31, 2017 was preliminary and was based on provisional fair values. During the second quarter, the Company received revised third-party valuations, performed other analyses and recorded $380 in accounts receivable for post-closing adjustments, which resulted in an adjusted net purchase price of $22,782. The post-closing adjustments and revised fair values resulted in the following adjustments to the net assets acquired, as previously reported at March 31, 2017:
 
June 30, 2017
 
Adjustments
 
As Previously Reported
March 31, 2017
Goodwill
$
8,849

 
$
(1,271
)
 
$
10,120

Identifiable intangible assets
9,240

 
840

 
8,400

Other net assets
4,693

 
51

 
4,642

Net assets acquired
$
22,782

 
$
(380
)
 
$
23,162


The acquisition was accounted for in accordance with ASC Topic 805, Business Combinations. The assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. Further analyses and post-close adjustments may result in additional adjustments to the value of net assets acquired.
Hetsco, Inc. is headquartered in Franklin, Indiana and provides emergency, specialty welding and construction services to natural gas processing, petrochemical, and air gas separation industries. Hetsco’s results are included in the Company’s E&C segment from the date of acquisition.
Contingent Consideration
The estimated fair value of contingent consideration relating to the 2015 Distribution & Storage (“D&S”) Thermax acquisition was $1,800 at the date of acquisition and was valued according to a discounted cash flow approach, which includes assumptions regarding the probability of achieving certain earnings targets and a discount rate applied to the potential payments. Potential payments may be paid between July 1, 2017 and July 1, 2019 based on the attainment of certain earnings targets. The potential payments related to Thermax contingent consideration are between $0 and $11,288.
Valuations are performed using Level 3 inputs as defined in the Fair Value Measurements note and are evaluated on a quarterly basis based on forecasted sales and earnings targets. Contingent consideration liabilities are classified as other current liabilities and other long-term liabilities in the condensed consolidated balance sheets. Changes in fair value of contingent consideration, including accretion, are recorded as selling, general, and administrative expenses in the condensed consolidated statements of operations and comprehensive income.
The following table represents the changes in contingent consideration liabilities:
Balance at December 31, 2016
$
1,923

Decrease in fair value of contingent consideration liabilities
(1,622
)
Balance at June 30, 2017
$
301


For the three and six months ended June 30, 2017, the fair value of contingent consideration decreased by $1,623 and $1,622, respectively. The decrease during the three months ended June 30, 2017 was primarily driven by economic circumstances that significantly reduced the likelihood of achieving certain earnings targets for the duration of the remaining potential payout period. For both the three months and six months ended June 30, 2016, the fair value of contingent consideration increased by $47.