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Business Acquisitions and Investments
 6 Months Ended
Jun. 30, 2024
Business Acquisitions and Investments [Abstract]  
Business Acquisitions and Investments
Note 3.  Business Acquisitions and Investments


Investment in Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co. Ltd.



In April 2014, we formed Foshan GWO YNG SMP Vehicle Climate Control & Cooling Products Co. Ltd. (“Gwo Yng”), a 50/50 joint venture with Gwo Yng Enterprise Co., Ltd., a China-based manufacturer of air conditioner accumulators, filter driers, hose assemblies and switches.  We acquired our 50% interest in the joint venture for approximately $14 million.  In March 2018, we acquired an additional 15% equity interest in the joint venture for Chinese yuan renminbi 26,475,583 (approximately $4.2 million), thereby increasing our equity interest in the joint venture to 65%.  While we increased our equity interest in the joint venture to 65%, the minority shareholder maintained substantive participating rights that allowed it to participate in certain significant financial and operating decisions that occur in the ordinary course of business.  As a result, we continued to account for our investment in the joint venture under the equity method of accounting.



In July 2023, we acquired an additional 15% equity interest in the joint venture for Chinese yuan renminbi 27,378,290 (approximately $4 million), thereby increasing our equity interest in Gwo Yng to 80%.  In connection with the transaction, we amended and restated the charter documents of Gwo Yng to remove all minority shareholder substantive participating rights, giving SMP control of Gwo Yng.  As a result, as of the closing date of the transaction, Gwo Yng was accounted for as a business combination achieved in stages (“a step acquisition”).  Accordingly, commencing on the closing of the transaction, we reported the results of Gwo Yng on a consolidated basis with the minority ownership interest reported as a noncontrolling interest.



The following table summarizes the allocation of the total step acquisition purchase consideration to the identifiable assets acquired and liabilities assumed based on their fair values (in thousands):

Total purchase consideration (a)
        
$
21,725
  
Assets acquired and liabilities assumed:
              
Cash and cash equivalents          
  
$
6,779
          
Receivables          
    
5,912
          
Inventory          
    
5,945
          
Other current assets          
    
528
          
Property, plant and equipment, net          
    
2,924
          
Operating lease right-of-use assets          
    
4,372
          
Intangible assets (b)          
    
532
          
Goodwill          
    
2,208
          
Long term investments and other assets
    
7,257
          
Current liabilities          
    
(6,004
)
        
Noncurrent operating lease liabilities
    
(3,455
)
        
                  Subtotal
            
26,998
  
       Fair value of acquired noncontrolling interest
            
(5,273
)
Total purchase consideration allocated to net assets acquired
          
$
21,725
  



(a) Total purchase consideration is the sum of the fair value of the previously held equity investment interest in Gwo Yng of $17.7 million and the cash paid of $4 million for the acquisition of the additional 15% equity ownership interest.

(b) Intangible assets consists of customer relationships of $0.4 million and capitalized software of $0.1 million.



Intangible assets of $0.4 million consisting of customer relationships is amortized on a straight-line basis over the estimated useful life of 10 years.  Goodwill of $2.2 million was allocated to the Temperature Control and Engineered Solutions segments in the amounts of $1.2 million and $1 million, respectively.  The goodwill reflects relationships, business specific knowledge and the replacement cost of an assembled workforce associated with personal reputations