ACQUISITIONS AND DISPOSITIONS

12 Months Ended

Dec. 31, 2023

ACQUISITIONS AND DISPOSITIONS

ACQUISITIONS AND DISPOSITIONS

4. ACQUISITIONS AND DISPOSITIONS

Acquisitions

The Company makes business acquisitions that align with its strategic business objectives. The assets and liabilities of acquired businesses are recorded in the Consolidated Balance Sheets based on estimates of the fair value of assets acquired, liabilities assumed and noncontrolling interests acquired as of the acquisition date. Goodwill is recognized in the amount that the purchase consideration paid exceeds the fair value of the net assets acquired. Purchase consideration includes both cash paid and the fair value of noncash consideration exchanged, including stock and/or contingent consideration exchanged, and is reduced by the amount of cash or cash equivalents acquired. Acquisitions during 2023, 2022 and 2021 were not significant to the Company’s consolidated financial statements; therefore, pro forma financial information is not presented.

2023 Activity

In November 2023, the Company acquired Flottec, LLC, a U.S.-based provider of flotation products and services for the mineral processing industry. The move will expand Nalco Water’s flotation offerings and its work to serve the industry from mine to metal. The acquisition became part of the Global Industrial reporting segment. The purchase accounting for this acquisition is preliminary and subject to change as the Company finalizes the valuation of intangible assets, income tax balances and working capital. The goodwill arising from the acquisition of Flottec, LLC is tax deductible.

In May 2023, the Company acquired Chemlink Laboratories LLC, a U.S.-based producer of small format cleaning solutions. The Company made two other immaterial acquisitions during the second quarter of 2023. All three acquisitions became part of the Global Institutional & Specialty reporting segment. The purchase accounting for these acquisitions are preliminary and subject to change as the Company finalizes the valuation of intangible assets, income tax balances and working capital. The goodwill arising from the acquisition of Chemlink Laboratories LLC is tax deductible.

2022 Activity

No acquisitions occurred during 2022.

2021 Activity

Purolite Acquisition

On December 1, 2021, the Company acquired Purolite for total consideration of $3,706 million in cash, net of cash acquired. Purolite is a US-based business that is a leading and fast-growing global provider of resins for the separation and purification of solutions that is highly complementary to the Company’s current offering and critical to safe, high quality drug production and biopharma product purification in the life sciences industries. It also provides purification and separation solutions for critical industrial markets like microelectronics, nuclear power and food and beverage. Prior to acquisition, Purolite prepared its consolidated financial statements pursuant to the requirements of UK GAAP.

The Purolite acquisition has been accounted for as a business combination with the assets acquired and liabilities assumed recognized at fair value as of the acquisition date. The fair values of intangible assets acquired were estimated using discounted cash flow analyses appropriate in the circumstances for the nature of the assets being valued. The valuation models incorporated projections of future cash flows and other valuation assumptions. Significant inputs and assumptions used in the Company’s customer relationship intangible asset valuations include projected revenues, contributory asset charges, tax savings due to amortization, income tax rates, customer attrition rates and discount rates. Significant inputs and assumptions used in the Company’s tradename and acquired technology intangible asset valuations include projected revenues, future asset utilities, royalty rates, tax saving due to amortization, income tax rates and discount rates.

The Company incurred certain transaction and integration costs associated with the acquisition that were expensed and were recorded in the Consolidated Statements of Income. Further information related to the Company’s special (gains) and charges is included in Note 3.

Purolite purchase accounting was finalized in the fourth quarter of 2022. The following table summarizes the final value of Purolite assets acquired and liabilities assumed, net of cash acquired, as of the acquisition date:

(millions)	December 1, 2021
Tangible assets		$361.9
Identifiable intangible assets
Customer relationships		870.0
Other technologies		285.0
Trademarks		73.0
Total assets acquired		1,589.9
Goodwill		2,260.6
Total liabilities		144.8
Total consideration transferred to sellers, net of cash acquired		$3,705.7

During 2022, the Company recorded purchase accounting adjustments associated with the finalization of the purchase accounting for its acquisition of Purolite. As a result of these purchase accounting adjustments, the Company made $7.2 million of acquisition-related payments, acquisition related net tangible assets decreased by $54.0 million, definite-lived intangible assets decreased by $185.4 million and goodwill increased by $246.6 million.

Tangible assets acquired primarily consist of accounts receivable of $61.6 million, property, plant and equipment of $156.5 million and inventory of $122.4 million. Liabilities assumed primarily consist of deferred tax liabilities of $38.2 million and current liabilities of $77.6 million. Identified intangible assets primarily consist of customer relationships, acquired technologies, and trade names and are being amortized over weighted average lives of 17, 14, and 5 years, respectively, with a weighted average life of 15 years.

Goodwill of $2,260.6 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 Life Sciences businesses. Purolite became part of the Global Healthcare & Life Sciences reportable segment. Goodwill of $2,146.3 million is deductible for income tax purposes.

Other Acquisitions

In February 2021, the Company acquired TechTex Holdings Limited (“TechTex”), a U.K.-based business which sells wet and dry wipes and other nonwovens products primarily for life sciences and healthcare applications. TechTex became part of the Global Healthcare & Life Sciences reporting segment. The purchase price included an immaterial holdback amount that was settled prior to December 31, 2021. Purchase accounting was finalized in the first quarter of 2022.

In July 2021, the Company acquired National Wiper Alliance, Inc. (“NWA”), a U.S.-based business which sells wipes for healthcare and institutional applications. NWA became part of the Global Healthcare & Life Sciences reporting segment. Purchase accounting was finalized in the third quarter of 2022.

In September 2021, the Company acquired EPN Water Col, Ltd. (“EPN”), a South Korean-based business which sells chemical products and manages installations at water treatment chemical injection facilities. EPN became part of the Global Industrial reporting segment. Purchase accounting was finalized in the fourth quarter of 2022.

The goodwill related to the acquisitions of TechTex or EPN is not tax deductible, whereas the goodwill arising from the acquisition of NWA is tax deductible.

Acquisitions

The components of the cash paid for other acquisitions, excluding the Purolite acquisition (as further disclosed above), for 2023, 2022 and 2021, are shown in the following table:

(millions)	2023		2022		2021
Net tangible assets acquired		$20.8		$-		$3.6
Identifiable intangible assets
Customer relationships		60.8		-		75.0
Trademarks		-		-		4.7
Non-compete agreements		2.1		-		3.0
Other technologies		25.8		-		1.5
Total intangible assets		88.7		-		84.2
Goodwill		70.2		-		140.6
Total aggregate purchase price		179.7		-		228.4
Acquisition-related liabilities and contingent consideration (a)		(3.9)		-		(4.4)
Total cash paid for acquisitions, including acquisition-related
liabilities and contingent consideration, net of cash acquired		$175.8		$-		$224.0

(a)Subsequent to the acquisitions, $1.4 in contingent consideration was remitted to the seller during 2021 and is included in investing activities on the Consolidated Statements of Cash Flows.

During 2023, the Company recorded purchase accounting adjustments. As a result of these purchase accounting adjustments, the Company made $4.1 million of acquisition-related payments, acquisition related net tangible assets increased by $1.7 million, acquisition related liabilities and contingent consideration decreased by $1.7 million and goodwill increased by $0.7 million.

During 2022, the Company recorded purchase accounting adjustments associated with the finalization of the purchase accounting for its acquisitions of TechTex, NWA and EPN. As a result of these purchase accounting adjustments, acquisition related net tangible assets decreased by $1.6 million, definite-lived intangible assets decreased by $5.6 million, and goodwill increased by $7.2 million.

The weighted average useful lives of identifiable intangible assets acquired during 2023 and 2021 were 12 and 13 years, respectively. No intangible assets were acquired during 2022.

Dispositions

No dispositions were significant to the Company’s consolidated financial statements for 2023, 2022 or 2021.