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ACQUISITIONS AND DIVESTITURES
 9 Months Ended
Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
ACQUISITIONS AND DIVESTITURES ACQUISITIONS AND DIVESTITURES
Industrial Systems Divestiture

On September 23, 2023, the Company signed an agreement to sell its industrial motors and generators businesses which represent the substantial majority of the Industrial Systems operating segment.

The transaction closed on April 30, 2024 for a total purchase price of $446.6 million. The total consideration remains subject to taxes, transaction expenses, working capital adjustments and customary post-closing adjustments. For the three and nine months ended September 30, 2024, the Company recognized a Loss on Sale of Businesses of zero and $4.3 million, respectively. The Company recognized a cumulative loss of $92.0 million on the sale of the industrial motors and generators businesses, which was primarily related to foreign currency translation losses that were reclassified out of accumulated other comprehensive income into earnings at the closing of the transaction.

The following table summarizes the fair value of the sale proceeds received in connection with the divestiture, which are subject to further post-closing adjustment:
April 30, 2024
Purchase price$400.0 
Cash transferred to buyer66.1 
Estimated working capital and other adjustments(19.5)
Total purchase price446.6 
Direct costs to sell(7.3)
Fair value of sale consideration, net(1)
$439.3 
(1) The fair value of sale consideration, net includes an immaterial post-close adjustment to the purchase price for which cash has not yet been received.

The following table summarizes the carrying value of the disposal group and resulting loss on sale:
April 30, 2024
Net assets sold$419.4 
Noncontrolling Interest(9.2)
Accumulated Other Comprehensive Income121.3 
Payables to seller(0.2)
Carrying value of disposal group$531.3 
Loss on Sale of Businesses$(92.0)

The assets and liabilities related to these businesses were included in Assets Held for Sale, Noncurrent Assets Held for Sale, Liabilities Held for Sale and Noncurrent Liabilities Held for Sale as of December 31, 2023, as shown in the table below:
December 31, 2023
Assets Held for Sale
Cash and Cash Equivalents$61.3 
Trade Receivables, Less Allowances88.3 
Inventories199.7 
Prepaid Expenses and Other Current Assets12.2 
  Total Current Assets Held for Sale$361.5 
Net Property, Plant and Equipment96.0 
Operating Lease Assets18.0 
Goodwill54.7 
Intangible Assets, Net of Amortization2.1 
Deferred Income Tax Benefits11.0 
Other Noncurrent Assets— 
Loss on Assets Held for Sale(87.7)
  Total Noncurrent Assets Held for Sale$94.1 
Liabilities Held for Sale
Accounts Payable$67.2 
Accrued Compensation and Employee Benefits11.3 
Other Accrued Expenses21.7 
Current Operating Lease Liabilities3.5 
  Total Current Liabilities Held for Sale$103.7 
Pension and Other Post Retirement Benefits0.9 
Noncurrent Operating Lease Liabilities16.2 
Other Noncurrent Liabilities3.3 
  Total Noncurrent Liabilities Held for Sale$20.4 

In addition to the assets and liabilities of the industrial motors and generators businesses, there are other assets recorded in Assets Held for Sale on the Company's Consolidated Balance Sheet as of December 31, 2023, which are not material.
Altra Transaction

On October 26, 2022, the Company entered into an Agreement and Plan of Merger (the “Altra Merger Agreement”) by and among the Company, Altra Industrial Motion Corp., a Delaware corporation (“Altra”), and Aspen Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”). Altra is a leading global manufacturer of highly-engineered products and sub-systems in the factory automation and industrial power transmission markets. Regal Rexnord entered into the Altra Merger Agreement because it believes it can recognize substantial revenue and cost synergies through the combination. In particular, Altra transforms Regal Rexnord's automation portfolio into a global provider with significant sales into markets with secular growth characteristics. Altra also adds significant capabilities to Regal Rexnord's industrial power transmission portfolio, in particular in clutches and brakes, allowing it to provide a broader offering, and more robust industrial powertrain solutions to its customers.

On March 27, 2023, in accordance with the terms and conditions of the Altra Merger Agreement, Merger Sub merged with and into Altra (the "Altra Merger"), with Altra surviving the Altra Merger as a wholly owned subsidiary of the Company (the “Altra Transaction”).

Pursuant to the Altra Merger Agreement, following the Altra Merger, each of Altra’s issued and outstanding shares of common stock were converted into $62.00 in cash, without interest (the “Altra Merger Consideration”). In addition, all Altra equity awards outstanding immediately prior to the Altra Merger were converted into an award of cash or an award of restricted stock equal to the equivalent value of the original equity award with similar terms and conditions based on the Altra Merger Consideration.

The Company's management determined that the Company is the accounting acquirer in the Altra Transaction based on the facts and circumstances noted within this section and other relevant factors. As such, the Company applied the acquisition method of accounting to the identifiable assets and liabilities of Altra, which have been measured at estimated fair value as of the date of the business combination.

The total purchase price to acquire Altra was $5.1 billion, which consisted of the following:

Cash paid for outstanding Altra Common Stock(1)
$4,051.0 
Stock based compensation(2)
23.1 
Payment of Altra debt(3)
1,061.0 
Pre-existing relationships(4)
(0.5)
Purchase price$5,134.6 

(1) Cash paid for the common stock component of the purchase price was based on 65.3 million shares of outstanding Altra Common Stock as of March 27, 2023 at $62.00 per share, in accordance with the Altra Merger Agreement.
(2) Represents fair value of replacement equity-based awards and Company common stock issued in settlement of other Altra share based awards. The portion of the fair value attributable to pre-acquisition service was recorded as part of the consideration transferred in the Altra Transaction of which $17.3 million was paid in cash during the second quarter of 2023.
(3) Cash paid by the Company to settle (a) the term loan facility, (b) the revolving credit facility and (c) 95.28% of the 6.125% senior notes due 2026 of Stevens Holding Company, Inc., a wholly owned subsidiary of Altra (the "Altra Notes"). $18.1 million of the Altra Notes remained outstanding following the closing of the Altra Transaction. See Note 7 - Debt and Bank Credit Facilities for more information.
(4) Represents effective settlement of outstanding payables and receivables between the Company and Altra. No gain or loss was recognized on this settlement.

Purchase Price Allocation

Altra’s assets and liabilities were measured at estimated fair values at March 27, 2023, primarily using Level 3 inputs. Estimates of fair value represent management’s best estimate of assumptions about future events and uncertainties, including significant judgments related to future cash flows, discount rates, competitive trends, margin and revenue growth assumptions, royalty rates and customer attrition rates and others. Inputs used were generally obtained from historical data supplemented by current and anticipated market conditions and growth rates expected as of the acquisition date.
The Company estimated the fair value of net assets acquired based on information available during the measurement period and as of March 31, 2024, the valuation process to determine the fair values of the net assets acquired during the measurement period was complete. The fair value of the assets acquired and liabilities assumed were as follows:

As Reported as of December 31, 2023Measurement period adjustmentsAs of March 31, 2024
Cash and Cash Equivalents$259.1 $— $259.1 
Trade Receivables258.1 (1.5)256.6 
Inventories387.5 (0.5)387.0 
Prepaid Expenses and Other Current Assets32.4 — 32.4 
Property, Plant and Equipment403.0 (0.5)402.5 
Intangible Assets(2)
2,142.0 — 2,142.0 
Deferred Income Tax Benefits0.7 0.1 0.8 
Operating Lease Assets46.8 — 46.8 
Other Noncurrent Assets12.7 — 12.7 
Accounts Payable(183.3)— (183.3)
Accrued Compensation and Benefits(66.0)— (66.0)
Other Accrued Expenses(1)
(144.6)(0.7)(145.3)
Current Operating Lease Liabilities(12.3)— (12.3)
Current Maturities of Long-Term Debt(0.4)— (0.4)
Long-Term Debt(25.3)— (25.3)
Deferred Income Taxes(533.3)8.2 (525.1)
Pension and Other Post Retirement Benefits(19.8)— (19.8)
Noncurrent Operating Lease Liabilities(29.0)— (29.0)
Other Noncurrent Liabilities(8.3)— (8.3)
Total Identifiable Net Assets2,520.0 5.1 2,525.1 
Goodwill2,614.6 (5.1)2,609.5 
Purchase price$5,134.6 $— $5,134.6 

(1) Includes $60.1 million related to Altra Transaction costs paid by the Company at the closing of the Altra Transaction.
(2) Includes $1,710.0 million related to Customer Relationships, $330.0 million related to Trademarks and $102.0 million related to Technology.

Transaction and Integration Costs

The Company incurred transaction and integration-related costs in connection with the Altra Transaction of approximately $3.9 million and $13.8 million during the three and nine months ended September 30, 2024, which includes legal, professional service and integration costs associated with the Altra Transaction. There were $7.5 million and $82.5 million of transaction and integration-related costs in connection with the Altra Transaction recognized during the three and nine months ended September 30, 2023, which includes legal and professional services and certain employee compensation costs, including severance and retention. These costs were recognized as Operating Expenses in the Company's Condensed Consolidated Statements of Income (Loss).
The Company also incurred $15.7 million of share-based compensation expense during the first quarter of 2023 related to the accelerated vesting of awards for certain former Altra employees. See Note 9 – Shareholders' Equity for additional information.

In connection with the Altra Transaction, the Company incurred additional costs due to the entry into certain financing arrangements. Such financing arrangements are described in Note 7 – Debt and Bank Credit Facilities.

Unaudited Pro Forma Information

The following unaudited supplemental pro forma financial information presents the Company's financial results for the three and nine months ended September 30, 2023. The pro forma financial information below is presented as if the Altra Transaction had occurred on January 2, 2022, the first day of the Company's fiscal year ended December 31, 2022. The pro forma financial information includes, where applicable, adjustments for: (i) additional amortization expense that would have been recognized related to the acquired intangible assets, (ii) additional interest expense on transaction related borrowings less interest income earned on the investment of proceeds from borrowings prior to the close of the Altra Transaction, (iii) additional depreciation expense that would have been recognized related to the acquired property, plant, and equipment, (iv) transaction costs and other one-time non-recurring costs, including share-based compensation expense related to the accelerated vesting of awards for certain former Altra employees, which reduced expenses by $7.5 million and $98.2 million for the three and nine months ended September 30, 2023, (v) additional cost of sales related to the inventory valuation adjustment which reduced expenses by $8.8 million and $52.9 million for the three and nine months ended September 30, 2023, and (vi) the estimated income tax effect on the pro forma adjustments.

The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have been achieved had the Altra Transaction been completed as of the date indicated or the results that may be obtained in the future.

For the Three Months Ended September 30, 2023
For the Nine Months Ended September 30, 2023
Net Sales$1,649.8 $5,093.6 
Net Loss Attributable to Regal Rexnord Corporation$(126.7)$(7.2)
Loss Per Share Attributable to Regal Rexnord Corporation:
   Basic$(1.91)$(0.11)
   Assuming Dilution$(1.91)$(0.11)