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Business Acquisitions and Investments | 9 Months Ended
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Sep. 30, 2021
Business Acquisitions and Investments [Abstract] |
Business Acquisitions and Investments | Note 3. Business Acquisitions and Investments 2021 Business Acquisitions Acquisition of Capital Stock of Stabil Operative Group GmbH (“Stabil”) In September 2021, we acquired 100% of the capital stock of Stabil Operative Group GmbH, a German company (“Stabil”), for Euros 13.7 million, or US$16.3 million, subject to certain post-closing adjustments. Stabil is a manufacturer and distributor of a variety of components, including electronic sensors, control units, and clamping devices to the European Original Equipment (“OE”) market, serving both commercial and light vehicle applications. The acquired Stabil business was paid for with cash funded by borrowings under our revolving credit facility with JPMorgan Chase Bank, N.A., as agent, and is headquartered on the outskirts of Stuttgart, Germany with facilities in Germany and Hungary. The acquisition, to be reported as part of our Engine Management Segment, is an excellent fit for our strategy of expansion beyond our core aftermarket business into complementary areas, and gives us exposure to a diversified group of blue chip European commercial and light vehicle OE customers. The preliminary allocation of purchase price to assets acquired and liabilities assumed is based upon estimates of fair values utilizing customary valuation procedures and techniques, as well as other information compiled by management. While we believe these preliminary estimates provide a reasonable basis for estimating the fair value of the assets acquired and liabilities assumed, and do not anticipate that any adjustments to these values will be significant, we will continue to evaluate available information prior to finalization of the amounts, particularly the amounts related to intangible assets, deferred income taxes and the final agreement of post-closing adjustments. The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed (in thousands):
Purchase price |  |  |  |  | $ | 16,290 |
Assets acquired and liabilities assumed: |  |  |  |  |  |  |
Receivables |  | $ | 2,852 |  |  |  |  |
Inventory |  |  | 5,126 |  |  |  |  |
Other current assets (1) |  |  | 1,628 |  |  |  |  |
Property, plant and equipment, net |  |  | 1,810 |  |  |  |  |
Operating lease right-of-use assets |  |  | 4,971 |  |  |  |  |
Intangible assets |  |  | 5,471 |  |  |  |  |
Goodwill |  |  | 4,827 |  |  |  |  |
Current liabilities |  |  | (4,190 | ) |  |  |  |
Noncurrent operating lease liabilities |  |  | (4,454 | ) |  |  |  |
Deferred income taxes |  |  | (1,751 | ) |  |  |  |
Net assets acquired |  |  |  |  |  | $ | 16,290 |
| (1) | The other current assets balance includes $0.9 million of cash acquired.
Intangible assets acquired of $5.5 million consist of customer relationships that will be amortized on a straight-line basis over the estimated useful life of 20 years. Goodwill of $4.8 million was allocated to the Engine Management Segment. The goodwill reflects relationships, business specific knowledge and the replacement cost of an assembled workforce associated with personal reputations. The intangible assets and goodwill are not deductible for tax purposes. Revenues from the acquired business included in our consolidated statement of operations from the acquisition date through September 30, 2021 were $2 million. Acquisition of Capital Stock of Trumpet Holdings, Inc. (“Trombetta”) In May 2021, we acquired 100% of the capital stock of Trumpet Holdings, Inc., a Delaware corporation, (more commonly known as “Trombetta”), for $111.7 million, subject to certain post-closing adjustments. Trombetta is a leading provider of power switching and power management products to Original Equipment (“OE”) customers in various markets. The acquired Trombetta business was paid for in cash funded by borrowings under our revolving credit facility with JPMorgan Chase Bank, N.A., as agent, and has manufacturing facilities in Milwaukee, Wisconsin; Sheboygan Falls, Wisconsin; Tijuana, Mexico, as well as a 70% ownership in a joint venture in Hong Kong, with operations in Shanghai and Wuxi, China (“Trombetta Asia, Ltd.”). The acquisition, to be reported as part of our Engine Management Segment, is an excellent fit for our strategy of expansion into the OE heavy duty market. The preliminary allocation of purchase price to assets acquired and liabilities assumed is based upon estimates of fair values utilizing customary valuation procedures and techniques, as well as other information compiled by management. While we believe these preliminary estimates provide a reasonable basis for estimating the fair value of the assets acquired and liabilities assumed, and do not anticipate that any adjustments to these values will be significant, we will continue to evaluate available information prior to finalization of the amounts, particularly the amounts related to intangible assets, deferred income taxes, noncontrolling interests and the final agreement of post-closing adjustments. The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed (in thousand s):
Purchase price |  |  |  |  | $ | 111,741 |
Assets acquired and liabilities assumed: |  |  |  |  |  |  |
Receivables |  | $ | 9,173 |  |  |  |  |
Inventory |  |  | 12,460 |  |  |  |  |
Other current assets (1) |  |  | 5,193 |  |  |  |  |
Property, plant and equipment, net |  |  | 4,939 |  |  |  |  |
Operating lease right-of-use assets |  |  | 3,847 |  |  |  |  |
Intangible assets |  |  | 54,700 |  |  |  |  |
Goodwill |  |  | 49,028 |  |  |  |  |
Current liabilities |  |  | (4,820 | ) |  |  |  |
Noncurrent operating lease liabilities |  |  | (3,065 | ) |  |  |  |
Deferred income taxes |  |  | (8,210 | ) |  |  |  |
Subtotal |  |  |  |  |  |  | 123,245 |
Fair value of acquired noncontrolling interest |  |  |  |  |  |  | (11,504 | )
Net assets acquired |  |  |  |  |  | $ | 111,741 |
| (1) | The other current assets balance includes $4.6 million of cash acquired.
Intangible assets acquired of $54.7 million consist of customer relationships of $39.4 million that will be amortized on a straight-line basis over the estimated useful life of 20 years; developed technology of $13.4 million that will be amortized on a straight-line basis over the estimated useful life of 15 years; and a trade name of $1.9 million that will be amortized on a straight-line basis over the estimated useful life of 10 years. Goodwill of $49 million was allocated to the Engine Management Segment. The goodwill reflects relationships, business specific knowledge and the replacement cost of an assembled workforce associated with personal reputations. The intangible assets and goodwill are not deductible for tax purposes. Revenues from the acquired business included in our consolidated statement of operations from the acquisition date through September 30, 2021 were $21.8 million. Acquisition of Particulate Matter Sensor Business of Stoneridge, Inc. (“Soot Sensor”) In March 2021, we agreed to acquire certain Soot Sensor product lines from Stoneridge, Inc. The product lines to be acquired manufacture sensors used in the exhaust and emission systems of diesel engines. The product lines are located in Stoneridge’s facilities in Lexington, Ohio and Tallinn, Estonia. We are not acquiring these facilities, nor any of Stoneridge’s employees, and will be relocating the production lines to our engine management plants in Independence, Kansas and Bialystok, Poland, respectively. The acquisition, to be reported as part of our Engine Management Segment, is an excellent fit for our strategy of expansion into the OE heavy duty market. Customer relationships to be acquired include Volvo, CNHi and Hino. The product lines located in Stoneridge’s facility in Lexington, Ohio were acquired in March 2021 for $2.1 million, and were paid for in cash funded by borrowings under our revolving credit facility with JPMorgan Chase Bank, N.A. The assets acquired include inventory, machinery & equipment and certain intangible assets. The product lines at Stoneridge’s Tallinn, Estonia facility will be acquired at a future date for approximately $800,000. Tallinn, Estonia assets to be acquired consist solely of machinery & equipment. The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed through September 30, 2021, based on their fair values (in thousands):
Purchase Price |  |  |  |  | $ | 2,138 |
Assets acquired and liabilities assumed: |  |  |  |  |  |  |
Inventory |  | $ | 1,032 |  |  |  |  |
Machinery and equipment, net |  |  | 351 |  |  |  |  |
Intangible assets |  |  | 755 |  |  |  |  |
Net assets acquired |  |  |  |  |  | $ | 2,138 |
Intangible assets acquired of approximately $0.8 million consist of customer relationships that will be amortized on a straight-line basis over the estimated useful life of 10 years. Revenues from the acquired business included in our consolidated statement of operations from the acquisition date through September 30, 2021 were $6.2 million.

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