Background and Nature of Operations (Tables)

12 Months Ended

Dec. 31, 2012

Purchase Price of Common Stock and Outstanding Common Stock

Based on the price of Pentair, Inc. common stock and our common shares issued on the date of the Merger, the purchase price was composed of the following:


In thousands
Value of common shares issued to Tyco shareholders ⁽¹⁾	$	4,811,363
Cash paid to Tyco shareholders in lieu of fractional common shares ⁽²⁾		542
Value of replacement equity-based awards to holders of Tyco equity-based awards ⁽³⁾		111,239


Total purchase price	$	4,923,144

(1)

Equals 110,886,444 Pentair Ltd. shares distributed to Tyco shareholders multiplied by the Merger date share price of $43.39.

(2)

Equals cash paid to Tyco shareholders in lieu of 12,490 Pentair Ltd. fractional shares multiplied by the Merger date share price of $43.39.

(3)

In accordance with applicable accounting guidance, the fair value of replacement equity-based awards attributable to pre-combination service is recorded as part of the consideration transferred in the Merger, while the fair value of replacement equity-based awards attributable to post-combination service is recorded separately from the business combination and recognized as compensation cost in the post-acquisition period over the remaining service period. The fair value of our equivalent stock options was estimated using the Black-Scholes valuation model utilizing various assumptions.

Estimated Fair Values of Assets Acquired and Liabilites Assumed

The following table summarizes our preliminary fair values of the assets acquired and liabilities assumed in the Merger:


In thousands
Cash and cash equivalents	$	691,702
Accounts and notes receivable		771,576
Inventories		1,046,165
Other current assets		98,212
Property, plant and equipment		822,001
Goodwill		2,520,110
Intangibles		1,425,072
Other non-current assets		275,103
Current liabilities		(856,341	)
Long-term debt		(914,530	)
Income taxes, including current and deferred		(364,573	)
Other liabilities and redeemable noncontrolling interest		(591,353	)


Total purchase price	$	4,923,144