Acquisitions And Divestitures

3 Months Ended

Mar. 31, 2023

ACQUISITIONS AND DIVESTITURES

Acquisition of Wind River Systems, Inc.

On December 23, 2022, Aptiv acquired 100% of the equity interests of Wind River Systems, Inc. (“Wind River”), a global leader in delivering software for the intelligent edge, for total consideration of approximately $3.5 billion. The results of operations of Wind River are reported within the Advanced Safety and User Experience segment from the date of acquisition. The Company acquired Wind River utilizing cash on hand, which included proceeds from the 2022 Senior Notes. Refer to Note 8. Debt for additional information regarding the 2022 Senior Notes. Upon completion of the acquisition, Aptiv incurred transaction related expenses totaling approximately $43 million, which were recorded within other expense, net in the statement of operations in the fourth quarter of 2022.

The acquisition was accounted for as a business combination, with the total purchase price allocated on a preliminary basis using information available in the fourth quarter of 2022. As previously disclosed, a portion of the cash consideration was unpaid as of December 31, 2022 and during the first quarter of 2023, $36 million was paid and recognized as a cash outflow from investing activities for the three months ended March 31, 2023. Adjustments recorded from the amounts disclosed also included a reduction to accrued liabilities of $17 million and minor adjustments to various other assets and liabilities assumed, resulting in a net reduction to goodwill of $12 million. The preliminary purchase price and related allocation to the acquired net assets of Wind River based on their estimated fair values is shown below (in millions):

Assets acquired and liabilities assumed


Purchase price, cash consideration, net of cash acquired	$	3,520



Accounts receivable, net	$	91
Contract assets	67
Property, plant and equipment	14
Intangible assets	1,490
Contract liabilities	(101)
Accrued liabilities	(45)
Deferred tax liabilities	(289)
Other assets, net	3
Identifiable net assets acquired	1,230
Goodwill resulting from purchase	2,290
Total purchase price allocation	$	3,520

Intangible assets primarily include $750 million of technology-related assets with approximate useful lives of sixteen years, $630 million for the fair value of customer-based assets with approximate useful lives ranging from sixteen to twenty-two years and $110 million recognized for the fair value of the acquired trade name with an approximate useful life of eighteen years. The estimated fair value of these assets was based on third-party valuations and management’s estimates, generally utilizing income and market approaches and is sensitive to certain assumptions including discount rates, projected revenue growth rates and profit margin. These assumptions are forward-looking in nature and are dependent on the future performance of Wind River and could be affected by future economic and market conditions. Goodwill recognized in this transaction is primarily attributable to expanded market opportunities, including integrating Wind River’s product offerings with existing Company offerings, synergies expected to arise after the acquisition and the assembled workforce of Wind River and is not deductible for tax purposes.

The purchase price and related allocation are preliminary and could be revised as a result of adjustments made to the purchase price, additional information obtained regarding liabilities assumed, including, but not limited to, contingent liabilities, revisions of provisional estimates of fair values, including, but not limited to, the completion of independent valuations related to intangible assets and certain tax attributes.

The pro forma effects of this acquisition would not materially impact the Company’s reported results for any period presented, and as a result no pro forma financial statements were presented.

Acquisition of Controlling Interest in Intercable Automotive Solutions

On November 30, 2022, Aptiv acquired 85% of the equity interests of Intercable Automotive Solutions S.r.l. (“Intercable Automotive”), a manufacturer of high-voltage busbars and interconnect solutions, for total consideration of $606 million. Intercable Automotive was formerly a subsidiary of Intercable S.r.l. The results of operations of Intercable Automotive are reported within the Signal and Power Solutions segment from the date of acquisition. The Company acquired its interest in Intercable Automotive utilizing cash on hand. Upon completion of the acquisition, Aptiv incurred transaction related expenses totaling approximately $10 million, which were recorded within other expense, net in the statement of operations in the fourth quarter of 2022.

The acquisition was accounted for as a business combination, with the total purchase price allocated on a preliminary basis using information available, in the fourth quarter of 2022. Adjustments recorded from the amounts disclosed as of December 31, 2022 included a reduction to deferred tax liabilities of $6 million and minor adjustments to various other assets and liabilities assumed, which resulted in a net reduction to goodwill of $10 million. The preliminary purchase price and related allocation to the acquired net assets of Intercable Automotive based on their estimated fair values is shown below (in millions):

Assets acquired and liabilities assumed


Purchase price, cash consideration, net of cash acquired	$	606


Inventory	$	78
Property, plant and equipment	77
Intangible assets	286
Deferred tax liabilities	(76)
Other liabilities, net	(11)
Identifiable net assets acquired	354
Goodwill resulting from purchase	347
Total	701
Less: redeemable noncontrolling interest	(95)
Total purchase price allocation	$	606

Intangible assets include $202 million recognized for the fair value of customer-based assets with approximate useful lives of nineteen years, $63 million of technology-related assets with estimated useful lives of approximately fifteen years and $21 million recognized for the fair value of the trade name license with an approximate useful life of fifteen years. The estimated fair value of these assets was based on third-party valuations and management’s estimates, generally utilizing income and market approaches. Goodwill recognized in this transaction is primarily attributable to synergies expected to arise after the acquisition and the assembled workforce of Intercable Automotive and is not deductible for tax purposes.

Concurrent with the acquisition, the Company entered into an agreement with the noncontrolling interest holders that provides the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining 15% of Intercable Automotive for cash of up to €155 million, beginning in 2026. The final purchase price is contractually defined and will be determined based on Intercable Automotive’s 2025 operating results. Due to the noncontrolling interest holders’ redemption rights, the noncontrolling interest has been classified as redeemable noncontrolling interest in the temporary equity section of the consolidated balance sheet. The fair value of the noncontrolling interest was determined using a Monte Carlo simulation approach and includes several assumptions including estimated future profitability, expected volatility rate and risk free rate.

The pro forma effects of this acquisition would not materially impact the Company’s reported results for any period presented, and as a result no pro forma financial statements were presented.

Acquisition of Höhle Ltd.

On April 3, 2023, Aptiv acquired 100% of the equity interests of Höhle Ltd. (“Höhle”), a manufacturer of microducts, for approximately €39 million (approximately $42 million, using foreign currency rates on the acquisition date), subject to customary post-closing adjustments, which will primarily be allocated to goodwill and other intangible assets. The acquisition will be accounted for as a business combination, with the operating results of Höhle included within the Company's Signal and Power Solutions segment from the date of acquisition. The Company acquired Höhle utilizing cash on hand.

Planned Exit from Majority Owned Russian Subsidiary

Given the sanctions put in place by the European Union (the “E.U.”), U.S. and other governments, which restrict our ability to conduct business in Russia, we initiated a plan to exit our majority owned subsidiary in Russia in the second quarter of 2022. As a result, the Company determined that this subsidiary, which is reported within the Signal and Power Solutions segment, met the held for sale criteria as of March 31, 2023. The Company had previously recorded a charge to impair the carrying value of the Russian subsidiary’s net assets to fair value during the year ended December 31, 2022 upon the initial designation as held for sale in the second quarter of 2022. The remaining assets and liabilities of the subsidiary were reclassified as held for sale and reflect the appropriate valuation allowances. The net assets and liabilities are de minimis and are presented as other current assets and other current liabilities, respectively, in the consolidated balance sheets as of March 31, 2023 and December 31, 2022. These assets and liabilities represent the only balances recorded as held for sale as of March 31, 2023 and December 31, 2022.