XML 43 R26.htm IDEA: XBRL DOCUMENT
v3.22.4

Acquisitions | 12 Months Ended
--- | ---
Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | Acquisitions Ozark Materials On October 3, 2022, we completed our acquisition of Ozark Materials, LLC (“OM”), and Ozark Logistics, LLC (“OL” and, together with OM, “Ozark Materials”), pursuant to that certain Equity Purchase Agreement (the “Purchase Agreement”), by and among Ingevity, Ozark Materials and Ozark Holdings, Inc. (“Seller”). In accordance with the Purchase Agreement, we acquired from Seller, all of the issued and outstanding limited liability company membership interests of Ozark Materials for a purchase price of $325.0 million, subject to customary adjustments for working capital, indebtedness and transaction expenses (the "Acquisition"). The Acquisition is being integrated into our Performance Chemicals segment and is included within our Pavement Technologies product line. We funded the Acquisition through a combination of borrowings under our existing credit facilities and cash on hand. The Acquisition is not considered significant to our Consolidated Financial Statements for the year ended December 31, 2022; therefore, proforma results of operations have not been presented. Preliminary Purchase Price Allocation Ozark Materials is considered an acquisition of a business under business combinations accounting guidance, and therefore we applied acquisition accounting. Acquisition accounting requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The aggregate purchase price noted above was allocated to the major categories of assets acquired and liabilities assumed based upon their estimated fair values at the acquisition date using primarily Level 2 and Level 3 inputs. These Level 2 and Level 3 valuation inputs include an estimate of future cash flows and discount rates. Additionally, estimated fair values are based, in part, upon outside appraisals for certain assets, including specifically-identified intangible assets. See Note 5 for an additional explanation of Level 2 and Level 3 inputs. The allocation of the purchase price to the assets acquired and liabilities assumed, including the residual amount allocated to goodwill, is based upon preliminary information and is subject to change within the measurement period (up to one year from the acquisition date) as additional information concerning final asset and liability valuations is obtained. During the measurement period, if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in revised estimated values of those assets or liabilities as of that date, we will revise the preliminary purchase price allocation. The effect of measurement period adjustments to the estimated fair values will be reflected as if the adjustments had been completed on the acquisition date. The impact of all changes that do not qualify as measurement period adjustments will be included in current period earnings.
Preliminary Purchase Price Allocation
In millions | Weighted Average Amortization Period | Fair Value
Cash and cash equivalents |  | $ | 8.0 |
Accounts receivable |  | 28.7 |
Inventories (1) |  | 48.4 |
Prepaid and other current assets |  | 2.0 |
Property, plant and equipment |  | 43.1 |
Intangible assets (2) |  |
Brands | 10 years | 15.0 |
Customer relationships | 15 years | 88.6 |
Developed technology | 7 years | 23.5 |
Goodwill (3) |  | 109.8 |
Other assets, including operating leases |  | 0.1 |
Total fair value of assets acquired |  | $ | 367.2 |
Accounts payable |  | 13.9 |
Other liabilities |  | 2.6 |
Total fair value of liabilities assumed |  | $ | 16.5 |
Less: Cash acquired |  | (8.0) |
Plus: Amounts due from Seller |  | 1.8 |
Total cash paid, less cash and restricted cash acquired | $ | 344.5 |
_______________ (1) Fair value of finished goods inventories acquired included a step-up in the value of $1.8 million, of which $0.9 million was expensed in the year ended December 31, 2022. The expense is included within "Cost of sales" on the consolidated statement of operations. Inventories are accounted for on a LIFO basis of accounting. (2) The aggregate amortization expense was $2.7 million for the year ended December 31, 2022. Estimated amortization expense is as follows: 2023 - $10.9 million, 2024 - $10.9 million, 2025 - $10.7 million, 2026 - $10.0 million, and 2027 - $10.0 million. (3) Goodwill largely consists of expected cost synergies and economies of scale resulting from the business combination. We expect the full amount to be deductible for income tax purposes. This acquired goodwill has been included within our Performance Chemicals reporting unit. See Note 8 for further information regarding our allocation of goodwill among our reporting segments. Acquisition and other-related costs Costs incurred to complete and integrate acquisitions and other strategic investments are expensed as incurred on our consolidated statement of operations. The following table summarizes the costs incurred associated with these combined activities.
| Years Ended December 31,
In millions | 2022 |  | 2021 |  | 2020
Legal and professional service fees | $ | 5.0 |  |  | $ | 0.6 |  |  | $ | 1.8 |
Acquisition-related costs | 5.0 |  |  | 0.6 |  |  | 1.8 |
Inventory fair value step-up amortization (1) | 0.9 |  |  | — |  |  | — |
Acquisition and other-related costs | $ | 5.9 |  |  | $ | 0.6 |  |  | $ | 1.8 |
_______________ (1) Included within "Cost of sales" on the consolidated statement of operations.

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationAndAssetAcquisitionAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration