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Business Combinations | 12 Months Ended
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Dec. 31, 2019
Business Combinations [Abstract] |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS Dutch Power Company B.V. On March 4, 2019, the Company acquired 100% of the issued and outstanding equity interests of Dutch Power Company B.V. ("Dutch Power"). Dutch Power designs, manufactures and sells a variety of landscape and vegetation management machines primarily in Europe. The primary reason for the Dutch Power acquisition was to enhance the Company's platform for growth by increasing both the Company's product portfolio and capabilities in the European market. The acquisition price was approximately $53,000,000. The total purchase price has been allocated on a preliminary basis to assets acquired and liabilities assumed, including estimated deferred taxes. Certain estimated values are not yet finalized and are subject to change. The Company will finalize the amounts once the necessary information is obtained and the analysis is complete. This allocation resulted in goodwill of $12,097,000, all of which has been assigned to the Company's Industrial reporting segment, with none of the goodwill being tax deductible. In the period between the date of acquisition and December 31, 2019, Dutch Power generated approximately $36,400,000 of net sales and $100,000 of net income. The Company has included the operating results of Dutch Power in its consolidated financial statements since the date of acquisition. The following table reflects the estimated fair value of the assets acquired and liabilities assumed as of the acquisition date (in thousands):
Cash | $ | 87 |
Accounts receivable | 6,278 |
Inventory | 17,731 |
Prepaid and other assets | 1,451 |
Property, plant and equipment | 13,439 |
Intangible assets | 14,095 |
Deferred tax liability | (4,265) |
Other liabilities assumed | (8,302) |
Net assets assumed | $ | 40,514 |
Goodwill | 12,097 |
Acquisition Price | $ | 52,611 |
Morbark, LLC. On October 24, 2019, the Company completed the acquisition of 100% of the outstanding capital shares of Morbark, LLC. ("Morbark") a former portfolio company of Stellex Capital Management. Morbark manufacturers equipment and aftermarket parts for forestry, tree maintenance, biomass, land management and recycling markets. These products are marketed under the Morbark, Rayco, Denis Cimaf and Boxer Equipment brand names. The total consideration for the purchase was approximately $354,000,000 on a debt free basis and subject to certain post-closing adjustments. In connection with this acquisition, Alamo Group expanded its credit facility from $250,000,000 to $650,000,000 to accommodate this event and the ongoing needs of the combined entities. The new credit facility has a five-year duration and consists of a $300,000,000 term loan and a $350,000,000 revolving line of credit. The Company financed the Morbark acquisition through $355,000,000 of new borrowings under the amended credit facility. The primary reason for the acquisition is to expand and complement our range of vegetation maintenance equipment in an adjacent market along with accelerating Morbark's international growth using the Company's existing presence in Europe, Brazil and Australia. This allocation resulted in goodwill of $102,662,000, all of which has been assigned to the Company's Industrial reporting segment. $73,963,000 of goodwill is tax deductible, the remaining balance is not. The acquisition was accounted for in accordance with ASC Topic 805 Business Combinations ("ASC Topic 805"). The total purchase price has been allocated on a preliminary basis to assets acquired and liabilities assumed, including deferred taxes, based on their estimated fair values as of October 24, 2019. Certain estimated values are not yet finalized and are subject to change. The Company will finalize the amounts once the necessary information is obtained and the analysis is complete. In the period between the date of acquisition and December 31, 2019, Morbark generated approximately $35,100,000 of net sales and $1,500,000 of net loss. The Company has included the operating results of Morbark in its consolidated financial statements since the date of acquisition. The following table reflects the estimated fair value of the assets acquired and liabilities assumed as of the acquisition date (in thousands):
Accounts receivable | $ | 13,966 |
Inventory | 72,972 |
Prepaid and other assets | 5,180 |
Rental Equipment | 1,133 |
Property, plant and equipment | 44,552 |
Intangible assets | 149,015 |
Deferred tax liability | (7,628) |
Other liabilities assumed | (32,275) |
Net assets assumed | $ | 246,915 |
Goodwill | 102,662 |
Total Acquisition Price net cash | 349,577 |
Plus: Cash | 4,735 |
Total Consideration | 354,312 |
The following table presents the unaudited pro forma combined results of operations of the Company and the acquired business units of Morbark as if the acquisition had occurred on January 1, 2018 for the years ended December 31, 2018 and December 31, 2019. This includes certain pro forma adjustments including: (i) recognition of the costs related to the step-up in fair value of the Morbark inventory, (ii) amortization of acquired intangible assets, (iii) the impact of certain fair value adjustments such as depreciation on the acquired property, plant and equipment, and (iv) interest expense for historical long-term debt of Morbark that was repaid and interest expense on additional borrowings by the Company to fund the acquisition. The unaudited pro forma statement of income of the Company is as follows:
|  | (Unaudited) Year Ended December 31, |  |
(In thousands, except per share amounts) |  | 2019 |  | 2018
Net sales |  | $ | 1,329,901 |  |  |  | $ | 1,214,285 |
Net income |  | $ | 69,417 |  |  |  | $ | 56,697 |
Diluted earnings per share |  | $ | 5.88 |  |  | $ | 4.82 |
The unaudited pro forma financial information is presented for informational purposes only and is not intended to represent or be indicative of the consolidated results of operations of the Company that would have been reported had the acquisition been completed as of the beginning of the periods presented, and should not be taken as being representative of the future consolidated results of operations of the Company.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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