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Acquisitions and Investments
 12 Months Ended
Dec. 31, 2012
Acquisitions and Investments

4. Acquisitions and Investments

2012

In the year ended December 31, 2012, the Company completed 17 acquisitions for an aggregate purchase price of $2,880 million, net of cash acquired. These acquisitions included:

 

  • All the shares of NKT Flexibles I/S (“NKT”), a Denmark-based designer and manufacturer of flexible pipe products and systems for the offshore oil and gas industry, acquired on April 4, 2012. The Company reported the NKT results within its Rig Technology segment from the date of acquisition.

 

  • All the shares of Enerflow Industries Inc. (U.S.) and certain assets of Enerflow Industries Inc. (Canada) (“Enerflow”), a Canada-based fabricator and manufacturer of pressure pumping, blending, and cementing equipment for use primarily in Canada and the U.S., acquired on May 16, 2012. The Company reported the Enerflow results within its Rig Technology segment from the date of acquisition.

 

  • All the shares of Wilson Distribution Holdings (“Wilson”), a U.S.-based distributor of pipe, valves and fittings as well as mill, tool and safety products and services, acquired on May 31, 2012. The Company reported the Wilson results within its Distribution & Transmission segment from the date of acquisition.

 

  • All the shares of CE Franklin Ltd. (“CE Franklin”), a Canada-based distributor of pipe, valves, flanges, fittings, production equipment, tubular products and other general oilfield supplies to oil and gas producers in Canada as well as to the oil sands, refining, heavy oil, petrochemical, forestry and mining industries, acquired on July 19, 2012. The Company reported the CE Franklin results within its Distribution & Transmission segment from the date of acquisition.

 

  •  

All the shares of Fiberspar Corporation (“Fiberspar”), a U.S.-based manufacturer of fiberglass-reinforced spoolable pipe for the oil and gas industry, acquired on October 10, 2012. The Company reported the Fiberspar results within its Petroleum Services & Supplies segment from the date of acquisition.

The purchase price allocation is complete for the majority of the 2012 acquisitions. Acquisitions made during the fourth quarter of 2012 remain preliminary until the valuations are complete. The following table displays the total preliminary purchase price allocation for the 2012 acquisitions and summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in millions):

 

Current assets, net of cash acquired

    $ 1,441   

Property, plant and equipment

      248   

Intangible assets

      981   

Goodwill

      1,000   

Other assets

      2   
  

 

 

  

Total assets acquired

      3,672   
  

 

 

  

Current liabilities

      585   

Long-term debt

      1   

Other liabilities

      206   
  

 

 

  

Total liabilities

      792   
  

 

 

  

Cash consideration, net of cash acquired

    $ 2,880   
  

 

 

  

The Company allocated $981 million to intangible assets (18 year weighted-average life). The intangible assets are expected to be amortizable and are comprised of: $473 million of customer relationships (20 year weighted-average life),$159 million of trademarks (16 year weighted-average life), and $348 million of other intangible assets (17 year weighted-average life). Goodwill specifically includes the expected synergies and other benefits that the Company believes will result from combining its operations with those of businesses acquired and other intangible assets that do not qualify for separate recognition, such as assembled workforce in place at the date of each acquisition. The $1,000 million allocated to goodwill represents the excess of the purchase price over the fair value of the net assets acquired. Goodwill resulting from the NKT and CE Franklin acquisitions and a portion of the Enerflow acquisition is not expected to be deductible for tax purposes.

 

2011

The Company completed nine acquisitions for an aggregate purchase price of $1,038 million, net of cash acquired. These acquisitions included:

 

  •  

The shares of Ameron International Corporation (“Ameron”), a U.S.-based manufacturer of highly engineered products and materials for the chemical, industrial, energy, transportation and infrastructure markets.

 

  •  

The shares of Conner Steel Products Holding Company, a U.S.-based manufacturer of storage and handling equipment for the oilfield services industry.

The allocation of the purchase price of each acquisition was based upon valuations. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition of the 2011 acquisitions (in millions):

 

     Ameron      All Other
Acquisitions		      Total  

Current assets, net of cash acquired

    $ 245       $ 106       $ 351   

Property, plant and equipment

      402         41         443   

Intangible assets

      142         131         273   

Goodwill

      199         178         377   

Other assets

      59         14         73   
  

 

 

     

 

 

     

 

 

  

Total assets acquired

      1,047         470         1,517   
  

 

 

     

 

 

     

 

 

  

Current liabilities

      154         80         234   

Long-term debt

      16         —           16   

Other liabilities

      173         56         229   
  

 

 

     

 

 

     

 

 

  

Total liabilities

      343         136         479   
  

 

 

     

 

 

     

 

 

  

Cash consideration, net of cash acquired

    $ 704       $ 334       $ 1,038   
  

 

 

     

 

 

     

 

 

  

The Company allocated $273 million to intangible assets (16 year weighted-average life), comprised of: $119 million of customer relationships (14 year weighted-average life), $39 million of trademarks (35 year weighted-average life), and $115 million of other intangible assets (12 year weighted-average life).

 

2010

The Company completed 12 acquisitions for an aggregate purchase price of $556 million, net of cash acquired. These acquisitions included:

 

  • The shares of Advanced Production and Loading PLC, a Norway-based designer and manufacturer of turret mooring systems and other products for Floating Production, Storage and Offloading vessels (“FPSOs”) and other offshore vessels and terminals for a purchase price of approximately $500 million.

 

  • The business and assets of Ambar Lone Star Fluids Services, LLP, a U.S.-based Drilling and Completions Fluids company.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition of the 2010 acquisitions (in millions):

 

Current assets, net of cash acquired

    $ 136   

Cost in excess of billings

      71   

Property, plant and equipment

      38   

Intangible assets

      299   

Goodwill

      298   

Other assets

      8   
  

 

 

  

Total assets acquired

      850   
  

 

 

  

Current liabilities

      142   

Billings in excess of cost

      41   

Other liabilities

      111   
  

 

 

  

Total liabilities

      294   
  

 

 

  

Cash consideration, net of cash acquired

    $ 556   
  

 

 

  

The Company allocated $299 million to intangible assets (18 year weighted-average life), comprised of: $116 million of customer relationships (15 year weighted-average life), $59 million of trademarks (30 year weighted-average life), and $124 million of other intangible assets (15 year weighted-average life).

Each of the acquisitions were accounted for using the purchase method of accounting and, accordingly, the results of operations of each business are included in the consolidated results of operations from the date of acquisition. A summary of the acquisitions follows (in millions);

 

     Years Ended December 31,  
     2012     2011     2010  

Fair value of assets acquired, net of cash acquired

    $ 3,672      $ 1,517      $ 850   

Cash paid, net of cash acquired

      (2,880 )      (1,038 )      (556 ) 
  

 

 

    

 

 

    

 

 

  

Liabilities assumed, debt issued and minority interest

    $ 792      $ 479      $ 294   
  

 

 

    

 

 

    

 

 

  

Excess purchase price over fair value of net assets acquired

    $ 1,000      $ 377      $ 298