ACQUISITIONS AND DISPOSITIONS

3 Months Ended

Mar. 31, 2017

ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS AND DISPOSITIONS

3. ACQUISITIONS AND DISPOSITIONS

Acquisitions

The Company makes acquisitions that align with strategic business objectives. The assets and liabilities of the acquired entities have been recorded as of the acquisition date, at their respective fair values, and are included in the Consolidated Balance Sheet and results of the Company from the date of acquisition. The purchase price allocation is based on estimates of the fair value of assets acquired and liabilities assumed. The aggregate purchase price of acquisitions has been reduced for any cash or cash equivalents acquired with the acquisition. Acquisitions during the first three months of 2017 and 2016 were not material to the Company’s consolidated financial statements; therefore pro forma financial information is not presented.

Anios Acquisition

On February 1, 2017, the Company acquired Anios for total consideration of $798.5 million in cash, including satisfaction of outstanding debt. Anios is a leading European manufacturer and marketer of hygiene and disinfection products for the healthcare, food service, and food and beverage processing industries. Anios provides an innovative product line that expands the solutions the Company is able to offer while also providing a complementary geographic footprint within the healthcare market. With pre-acquisition annual sales of approximately $245 million, the acquired business became part of the Company’s Global Institutional reportable segment during the first quarter of 2017. During 2016, the Company deposited €50 million in an escrow account that was released back to the Company upon closing of the transaction in February 2017. As shown within Note 4, this was recorded as restricted cash within Other Assets on the Consolidated Balance Sheet as of December 31, 2016.

The Company incurred certain acquisition and integration costs associated with the transaction that were expensed and are reflected in the Consolidated Statement of Income. A total of $6.0 million ($4.2 million after tax) of charges were incurred during the first quarter of 2017, of which $1.5 million ($1.1 million after tax) were included in cost of sales and are related to recognition of fair value step-up in Anios inventory, which is maintained on a FIFO basis.

The Anios acquisition has been accounted for using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at fair value as of the acquisition date. Certain estimated values are not yet finalized and are subject to change. Amounts for certain deferred tax assets and liabilities, environmental reserves, certain tangible and intangible assets, income tax uncertainties, and goodwill remain subject to change, as information necessary to complete the analysis is obtained. The Company expects to finalize these by the filing of the 2017 Form 10-K.

The following table summarizes the preliminary value of Anios assets acquired and liabilities assumed as of the acquisition date.

(millions)
Tangible assets	$ 142.7
Identifiable intangible assets:
Customer relationships	250.9
Trademarks	49.5
Other technology	15.1
Total assets acquired	458.2
Total liabilities assumed	190.1
Goodwill	530.4
Total consideration transferred	798.5
Long-term debt repaid upon close	193.0
Net consideration transferred to sellers	$ 605.5

Net tangible assets are primarily comprised of accounts receivable of $66.2 million, property, plant and equipment of $25.6 million and inventory of $29.7 million.

The customer relationships, trademarks, and other technology are being amortized over weighted average lives of 18,  11, and 12 years, respectively.

Goodwill of $530.4 million arising from the acquisition consists largely of the synergies and economies of scale expected through adding complementary geographies and innovative products to the Company’s healthcare portfolio. All of the goodwill was assigned to the Healthcare operating segment within the Global Institutional reportable segment. None of the goodwill recognized is expected to be deductible for income tax purposes.

Other Acquisitions

During the first quarter of 2017, the Company paid $28 million for acquisitions, of which $18 million was attributed to certain identifiable intangible assets. The weighted average useful life of these identifiable intangible assets acquired was 12 years. Additionally, there were immaterial purchase price adjustments related to prior year acquisitions.

During the first quarter of 2016, the Company paid $12 million for acquisitions, of which $2.5 million was attributed to certain identifiable intangible assets. The weighted average useful life of these identifiable intangible assets acquired was 5 years. Additionally, there were immaterial purchase price adjustments related to prior year acquisitions.

Dispositions

There were no business dispositions during the first quarter of 2017 or 2016.