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Business Combination | 9 Months Ended
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Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract] |
Business Combination | Business Combination On August 31, 2023, the Company acquired all of the outstanding shares of Heimbach, a privately-held manufacturer of paper machine clothing with headquarters in Düren, Germany. Heimbach is a global supplier of paper machine clothing for the production of all grades of paper and cardboard on all machine types as well as high-tech textile products used in a variety of sectors, such as the food processing, chemicals, construction materials and automotive industries. Heimbach is now a division under the MC segment. The Paper Machine Clothing ("PMC") industry has attractive dynamics and the acquisition of Heimbach provides increased scale and complementary technology that further drives the Machine Clothing segment's differentiated manufacturing, sales and service network. The acquisition was funded using cash on-hand. The following table summarizes the total consideration paid, excluding debt assumed, for the acquisition of Heimbach:
(in thousands) |  | August 31, 2023
Cash consideration |  | $ | 145,816 |
Indemnity release |  | (1,750) |
Total consideration paid |  | $ | 144,066 |
The acquisition was accounted for under the acquisition method in accordance with ASC 805, Business Combinations. The assets acquired and the liabilities assumed were recorded based on their preliminary fair values at the date of acquisition as follows:
(in thousands) |  | August 31, 2023
Assets acquired: |  |
Cash and cash equivalents |  | $ | 12,347 |
Accounts receivables |  | 52,704 |
Inventories |  | 41,538 |
Property, plant and equipment |  | 126,057 |
Other intangible assets |  | 14,464 |
Other current assets |  | 7,452 |
Other noncurrent assets |  | 6,694 |
Total assets acquired |  | $ | 261,256 |
Liabilities assumed: |  |
Assumed debt |  | $ | 32,700 |
Accounts payable |  | 8,243 |
Accrued liabilities |  | 27,257 |
Other noncurrent liabilities |  | 36,313 |
Income taxes payable |  | 288 |
Deferred tax liabilities |  | 10,757 |
Total liabilities assumed |  | $ | 115,558 |
Net assets acquired |  | $ | 145,698 |
Noncontrolling interest |  | $ | (1,632) |
Total consideration |  | $ | 144,066 |
For the three and nine months ended September 30, 2023, the Company incurred acquisition related costs of $1.6 million and $2 million, respectively. These costs are included in Selling, general and administrative expenses in the Consolidated statements of income. The preliminary fair values of the property, plant and equipment of $126.1 million were determined using the cost-approach and a market-approach because the selected approaches were appropriate for the valuation analysis and sufficient information was available for their use. The Company recorded $1.1 million of depreciation expense for the three and nine months ended September 30, 2023. The preliminary fair values of the identifiable intangible assets totaling $14.5 million, consisting of the Heimbach trade name and developed technology, was determined using the income approach, specifically, a relief from royalty method. The fair value of the trade name was $6.0 million and is considered an indefinite-lived asset because of Heimbach's rich brand heritage and customer service to the paper machine clothing industry dating back to 1811. The fair value of the developed technology was $8.5 million and includes intellectual property-related technologies as well as know-how developed by Heimbach; and is being amortized over its economic period of benefit, which is 9 years. This amortization period represents the estimated useful life of the asset. The Company recorded $0.1 million of intangible amortization for the three and nine months ended September 30, 2023. The preliminary fair values of the assets acquired includes $3.2 million and $0.1 million of operating and finance lease right-of-use assets, respectively. The preliminary fair values of the liabilities assumed includes $3.2 million and $0.1 million of operating and finance lease liabilities, respectively, of which, $1.1 million and $0.1 million of operating and finance lease liabilities, respectively, are current liabilities. Debt assumed included $32.7 million aggregate outstanding amount of bank debt with several European financial institutions with fixed interest rates ranging from 0.9% to 2.93% and maturity dates ranging from September 25, 2023 to June 30, 2031. Bank agreements allowed for the repayment of the debt upon demand by certain financial institutions in the event of a change in control. Some of the assumed bank debt may become due upon notification by those financial institutions before the maturity date of the bank agreements. At September 30, 2023, the foreign debt assumed was $29.6 million, of which $27.2 million was classified as Current maturities on long-term debt. The preliminary fair value of the liabilities assumed include $35.3 million of pension liabilities for various defined benefit plans. Heimbach's results of operations have been included in the Company's financial statements for the period subsequent to the completion of the acquisition on August 31, 2023. Heimbach contributed $15.6 million of revenue and a $(0.5) million operating loss for the period ended September 30, 2023.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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