Business Combinations

6 Months Ended

Mar. 31, 2018

Business Combinations [Abstract]

Business Combinations

BUSINESS COMBINATIONS

During the first half of fiscal year 2018, we completed five acquisitions with an aggregate purchase price, net of cash acquired, of $281.0. The largest acquisition was completed during the first quarter of fiscal year 2018 and consists primarily of three air separation units serving onsite and merchant customers in China. This acquisition is expected to strengthen our position in the region. The results of this business are consolidated within our Industrial Gases – Asia segment.

The 2018 acquisitions resulted in the recognition of $168.9 of plant and equipment, $62.9 of goodwill, $3.0 of which is deductible for tax purposes, and $65.3 of intangible assets, primarily customer relationships, having a weighted-average useful life of twelve years. The goodwill recognized on the transactions is attributable to expected growth and cost synergies and was recorded in the Industrial Gases – Asia and the Industrial Gases – EMEA segments.

These acquisitions did not materially impact our consolidated income statements for the periods presented.

Subsequent Event

On 10 September 2017, Air Products signed an agreement to form a joint venture, Air Products Lu’an (Changzhi) Co., Ltd. (“the JV”) with Lu’An Clean Energy Company ("Lu’An"). The JV will receive coal, steam and power from Lu’An and will supply syngas to Lu’An under a long-term onsite contract. On 26 April 2018, we completed the formation of the JV, which Air Products will consolidate and of which Air Products owns 60% and Lu’An owns 40%. Air Products contributed four large air separation units to the JV having a carrying value of approximately $300. In addition, on 26 April 2018 (“the acquisition date”), the JV acquired gasification and syngas clean-up assets from Lu’An (“the acquisition”). In connection with the closing of the acquisition, we paid cash of approximately 1.7 billion RMB (approximately $270) and expect to make a final payment of approximately 1.5 billion RMB (approximately $230 as of 26 April 2018) in the fourth quarter of 2018.

The transaction will be accounted for as a business combination. The JV will be consolidated within the results of the Industrial Gases – Asia segment following the acquisition date. The initial accounting for the business combination is incomplete as of the date of this report. In total, we expect the carrying value of the plant and equipment of the joint venture to be approximately $1.3 billion, subject to the completion of an asset valuation.