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Business Acquisitions and Investments | 9 Months Ended
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Sep. 30, 2022
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 $16.3 million. 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, reported as part of our Engine Management Segment, aligns with 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 following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values (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. Incremental revenues from the acquired Stabil business included in our consolidated statement of operations for the three months and nine months ended September 30, 2022 were $3.3 million and $14.9 million, respectively. 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. 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, aligns with our strategy of expansion into non-aftermarket parts. The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values (in thousands):
Purchase price |  |  |  |  | $ | 111,711 |
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 |  |  | 49,250 |  |  |  |  |
Current liabilities |  |  | (5,072 | ) |  |  |  |
Noncurrent operating lease liabilities |  |  | (3,065 | ) |  |  |  |
Deferred income taxes |  |  | (8,210 | ) |  |  |  |
Subtotal |  |  |  |  |  |  | 123,215 |
Fair value of acquired noncontrolling interest |  |  |  |  |  |  | (11,504 | )
Net assets acquired |  |  |  |  |  | $ | 111,711 |
| (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 $49.3 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. Incremental revenues from the acquired Trombetta business were $27.4 million for the six months ended June 30, 2022 ($16.6 million and $10.8 million in the first quarter and second quarter of 2022, respectively) and were included in our consolidated statement of operations for the nine months ended September 30, 2022. Acquisition of Particulate Matter Sensor Business of Stoneridge, Inc. (“Soot Sensor”) In March 2021 and November 2021, we finalized the acquisitions of certain Soot Sensor product lines from Stoneridge, Inc. for $2.9 million. The acquired product lines were paid for with cash funded by borrowings under our revolving credit facility with JPMorgan Chase Bank, N.A. The assets acquired include inventory, machinery, and equipment and certain intangible assets. The product lines acquired are used to manufacture sensors used in the exhaust and emission systems of diesel engines. The acquired product lines were located in Stoneridge’s facilities in Lexington, Ohio and Tallinn, Estonia. We did not acquire these facilities, nor any of Stoneridge’s employees, and have substantially completed the relocation of the acquired inventory, machinery and equipment related to the product lines to our engine management plants in Independence, Kansas and Bialystok, Poland. The acquisition, reported as part of our Engine Management Segment, aligns with our strategy of expansion into non-aftermarket parts. Customer relationships acquired include Volvo, CNHi and Hino. The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values (in thousands):
Purchase Price |  |  |  |  | $ | 2,924 |
Assets acquired and liabilities assumed: |  |  |  |  |  |  |
Inventory |  | $ | 1,032 |  |  |  |  |
Machinery and equipment, net |  |  | 1,137 |  |  |  |  |
Intangible assets |  |  | 755 |  |  |  |  |
Net assets acquired |  |  |  |  |  | $ | 2,924 |
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. Incremental revenues from the acquired Soot Sensor business included in our consolidated statement of operations for the nine months ended September 30, 2022 were $2.3 million, all of which relates to the first quarter of 2022.

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