Business Combination Business Combination

12 Months Ended

Sep. 30, 2019

Business Combination Disclosure [Text Block]

Acquisitions and Divestitures

Divestiture of Anvil

On January 6, 2017, we sold Anvil to affiliates of One Equity Partners for cash proceeds of $305.7 million and the agreement by the purchaser to reimburse us for expenditures to settle certain previously existing liabilities.

The table below presents a summary of the sale of Anvil, in millions.



Gross cash proceeds	$	305.7
Noncash proceeds	1.9
Total proceeds	307.6
Transaction expenses	(8.3		)
Net proceeds	299.3
Assets and liabilities disposed	(189.8		)
Gain on sale, pre-tax	109.5
Income tax	(41.6		)
Gain on sale, net of tax	$	67.9

The table below presents a summary of the operating results for the Anvil discontinued operations in 2017, in millions. These operating results do not reflect what they would have been had Anvil not been classified as discontinued operations.



Net sales	$	83.1
Cost of sales	62.8
Gross profit	20.3
Operating expenses:
Selling, general and administrative	17.2
Other charges	0.2
Total operating expenses	17.4
Operating income	2.9
Interest expense, net	—
Income before income taxes	2.9
Income tax expense	1.8
	1.1
Gain on sale, net of tax	67.9
Income from discontinued operations	$	69.0

Divestiture of Burlington plant

On December 4, 2017, we sold an idle property in Burlington, New Jersey that had previously been a plant in our former

U.S. Pipe segment and recorded a gain of $9.0 million in our Corporate segment. We received $7.4 million, recorded net current assets of $0.8 million and conveyed plant, property and equipment with a net carrying value of $0.4 million, and the buyer assumed related environmental liabilities with a carrying value of $1.2 million.

Acquisition of Singer Valve

On February 15, 2017, we acquired Singer Valve, a manufacturer of automatic control valves, and its affiliates for aggregate cash consideration of $26.6 million net of post-closing adjustments. Singer Valve had net sales of approximately $15 million in calendar 2016 and is included in Infrastructure.

The allocation of consideration to the assets and liabilities of these companies, is presented below, in millions.



Assets acquired, net of cash:
Receivables	$	3.0
Inventories	5.8
Other current assets	0.2
Property, plant and equipment	1.0
Intangible assets	11.4
Goodwill	7.2
Liabilities assumed:
Accounts payable	0.7
Other current liabilities	0.4
Current and long term debt	0.1
Deferred income tax liability	0.8
Consideration paid	$	26.6

Acquisition of Krausz

On December 3, 2018, we completed our acquisition of the outstanding equity of Krausz, a manufacturer of pipe couplings, grips and clamps with operations in the United States and Israel, for $140.7 million, net of cash acquired, including the assumption and simultaneous repayment of certain debt of $13.2 million. The acquisition of Krausz was financed with cash on hand. We believe that the Krausz product line is complementary to our existing Infrastructure products and will improve our positioning in the pipe repair market.

We have recognized the assets acquired and liabilities assumed at their estimated acquisition date fair values, with the

excess of the purchase price over the estimated fair values of the identifiable net assets acquired recorded as goodwill. The

accounting for the business combination is based on currently available information and is considered preliminary. We are still gathering information about property, plant, and equipment, based on facts that existed as of the date of the acquisition. In addition, not all Israeli tax returns for the year ended December 31, 2018 have been completed, and completion of these returns may identify changes to tax-related amounts that existed at the acquisition date and require adjustment to the opening balance sheet. During 2019, we made adjustments to our initially-recorded estimates of the fair value of the assets acquired and liabilities assumed, which decreased net working capital by $2.0 million, increased non-current assets and non-current liabilities by $1.7 million each, increased deferred income taxes by $9.9 million and increased intangible assets by $37.8 million, and which resulted in a net decrease in goodwill of $21.4 million. The final accounting for the business combination may differ materially from that presented in these consolidated financial statements.

The results of Krausz, including net sales of $37.2 million, are included within our Infrastructure segment for all periods following the acquisition date.

The preliminary estimated goodwill below is attributable to the strategic opportunities and synergies that we expect to arise

from the acquisition of Krausz and the value of its workforce. The goodwill is nondeductible for income tax purposes. Identified intangible assets consist of patents, customer relationships and favorable leasehold interests with an estimated weighted average useful life of approximately 12 years and tradenames with an indefinite life. Values of intangible assets were determined using a discounted cash flow method.

The following is a summary of the estimated fair values of the net assets acquired (in millions):



Assets, net of cash:
Receivables	$	6.9
Inventories	17.0
Other current assets	0.2
Property, plant and equipment	8.4
Other non-current assets	1.7
Identified intangible assets:
Patents	32.1
Customer relationships	8.7
Tradenames	4.6
Favorable leasehold interests	2.3
Goodwill	80.1
Liabilities:
Accounts payable	(5.5		)
Other current liabilities	(2.9		)
Deferred income taxes	(11.2		)
Other non-current liabilities	(1.7		)
Consideration paid	140.7
Repayment of Krausz debt	(13.2		)
Consideration paid included in net cash used in investing activities	$	127.5