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Transactions | 12 Months Ended
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Dec. 31, 2021
Transactions [Abstract] |
Transactions | 19. Transactions Acquisitions For the year ended December 31, 2021, the Company completed two acquisitions for an aggregate purchase price consideration of approximately $119 million. The aggregate purchase price was comprised of $96 million of cash, subject to working capital adjustments, and an estimated $23 million of contingent consideration if certain financial and profitability thresholds are achieved following the closing of the transactions. One acquisition has a maximum contingent payment of approximately $6 million based on a 3.25-year earn-out period. The other acquisition has no maximum payment based on a 1-year earn-out period for which the undiscounted estimated range of outcomes was $0 to $45 million. These acquisitions primarily expanded the Company’s offering in the U.S. to provide the rental, sale and service of surface-mounted horizontal pumping systems and horizontal jet pumping systems, as well as, to provide engineering and construction services. The Company has included the financial results of the acquisitions in its consolidated financial statements from the date of each acquisition. The fair value of acquisition-related contingent consideration liabilities was determined using the Monte Carlo simulation based on the Company's estimated future cash flow projections, the probability of achievement and the estimated discount rates, all of which were classified as level 3 inputs under the fair value hierarchy. For the year ended December 31, 2021, as a result of the timing of the earn-out periods, results to date and the remaining forecasts for the periods, the Company reduced the contingent consideration liabilities by approximately $10 million which was recognized as income in other income (expense) in the consolidated statements of operations. The fair value of contingent consideration as of December 31, 2021 was $13 million using a discount rate of 14% and was included in other current liabilities in the consolidated balance sheets. Changes in business conditions or other events could significantly change the level 3 inputs, and therefore could result in material changes to the fair value of the contingent consideration. The Company performed its preliminary valuations as of the applicable acquisition dates of the acquired net assets and recognized estimated goodwill of $67 million and intangible assets of $11 million in the U.S. segment, which are subject to change. If additional information is obtained about these assets and liabilities within the measurement period (not to exceed one year from the date of acquisition), the Company will refine its estimate of fair value to allocate the purchase price more accurately; any such revisions are not expected to be significant. The following table summarizes the purchase price allocation detail (in millions):
|  | As initially reported |
Consideration transferred: |  |  |
Cash |  | $ | 96 |
Estimated fair value of contingent consideration |  |  | 23 |
Net purchase price |  | $ | 119 |
Fair value of net assets acquired: |  |  |
Current assets other than cash |  | $ | 7 |
Property, plant and equipment |  |  | 36 |
Customer relationships and other intangibles (1) |  |  | 11 |
Other assets and liabilities, net |  |  | (2 | )
Total fair value of net assets acquired |  | $ | 52 |
Goodwill (2) |  | $ | 67 |
(1) Intangible assets acquired are amortized over a 9-year weighted average period. (2) The amount of goodwill represents the excess of its purchase price over the fair value of net assets acquired. Goodwill includes the expected benefit that the Company believes will result from combining its operations with those of the businesses acquired. The amount of goodwill expected to be deductible for income tax purposes is approximately $54 million, subject to changes in the fair value of contingent consideration liability subsequent to the acquisition date. For the year ended December 31, 2019, the Company completed two acquisitions for a net purchase price consideration of approximately $8 million cash. These acquisitions expand NOW’s market in the U.S. The Company completed its valuations as of the acquisition date of the acquired net assets and recognized goodwill of $6 million and intangible assets of $2 million in the United States segment. The full amount of goodwill recognized is expected to be deductible for income tax purposes. Acquisition-related costs were less than $1 million for the year ended December 31, 2019. The Company has not presented supplemental pro forma information because the acquired operations did not materially impact the Company’s consolidated operating results. Divestitures As of December 31, 2019, as a result of strategic review of its assets, the Company decided to commit to a plan to divest a business that is primarily in the United States segment selling cutting tools to the aerospace and automotive markets. For the year ended December 31, 2019, the carrying value of the net assets held-for-sale was compared to the estimated fair value resulting in a $9 million impairment which was included in impairment and other charges in the consolidated statements of operations and the remaining $34 million of assets and $6 million of liabilities were classified as held-for-sale in the consolidated balance sheets. In the first quarter of 2020, the Company completed the sale of its held-for-sale business as of year-end 2019. During the fourth quarter of 2020, the Company completed the sale of a business that sells lighting solutions locally in the United Kingdom. Neither divestiture of business qualified to be a discontinued operation as it did not represent a strategic shift that would have a major effect on the Company’s operations and financial results. Both sales resulted in an aggregate loss of $1 million for the year ended December 31, 2020 and were included in impairment and other charges in the consolidated statements of operations, subject to customary purchase price adjustments as defined in the transaction agreements.

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