Note 2. Acquisitions

2018 Acquisitions

On November 1, 2018, we acquired All Metals Holding, LLC, including its operating subsidiaries All Metals Processing & Logistics, Inc. and All Metals Transportation and Logistics, Inc. (collectively, “All Metals”). All Metals is headquartered in Spartanburg, South Carolina with an additional facility in Cartersville, Georgia. All Metals specializes in toll processing for automotive, construction, appliance and other diverse-end markets, and provides value-added transportation and logistics services for metal products from six strategically located terminals throughout the southeastern United States. All Metals’ net sales during the period from November 1, 2018 to December 31, 2018 were $4.2 million.

On October 23, 2018, we purchased the remaining 40% noncontrolling interest of Acero Prime, S. de R.L. de C.V. (“Acero Prime”), a toll processor in Mexico, which increased our ownership from 60% to 100%. Acero Prime, headquartered in San Luis Potosi, has four toll processing locations. Acero Prime performs metal processing services such as slitting, multi-blanking and oxy-fuel cutting, as well as storage and supply-chain management for a variety of different industries including automotive, home appliance, lighting, HVAC, machinery and heavy equipment. Acero Prime’s net sales in 2018 were $41.0 million. We have consolidated the financial results of Acero Prime since October 1, 2014 when we acquired a controlling interest. Consequently, the increase in our ownership from 60% to 100% was accounted for as an equity transaction.

On August 1, 2018, we acquired KMS Fab, LLC and KMS South, Inc. (collectively, “KMS” or the “KMS Companies”). The KMS Companies are headquartered in Luzerne, Pennsylvania. The KMS Companies specialize in precision sheet metal fabrication ranging from prototypes to large production runs which utilize a wide variety of metals and fabrication methods including laser cutting, stamping, turret punching, machining, powder coating and welding. The KMS Companies’ net sales during the period from August 1, 2018 to December 31, 2018 were $11.9 million.

On March 1, 2018, we acquired DuBose National Energy Services, Inc. (“DuBose Energy”) and its affiliate, DuBose National Energy Fasteners & Machined Parts, Inc. (“DuBose Fasteners” and, together with DuBose Energy, “DuBose”). DuBose is headquartered in Clinton, North Carolina. DuBose specializes in fabrication, supply and distribution of metal and metal products to the nuclear industry, including utilities, component manufacturers and contractors. DuBose’s net sales during the period from March 1, 2018 to December 31, 2018 were $26.9 million.

We funded our 2018 acquisitions with borrowings on our revolving credit facility and cash on hand.

The allocation of the total purchase price for the All Metals, Dubose and KMS acquisitions to the fair values of the assets acquired and liabilities assumed was as follows:


	(in millions)
Cash	$	2.4
Accounts receivable		13.1
Inventories		10.0
Property, plant and equipment		20.2
Goodwill		33.8
Intangible assets subject to amortization		25.0
Intangible assets not subject to amortization		18.3
Other current and long-term assets		1.1
Total assets acquired		123.9
Current and long-term debt		25.9
Deferred taxes		7.8
Other current and long-term liabilities		9.2
Total liabilities assumed		42.9
Net assets acquired	$	81.0

2017 Acquisition

On October 2, 2017, through our wholly owned subsidiary Diamond Manufacturing Company, we acquired Ferguson Perforating Company (“Ferguson”). Ferguson, headquartered in Providence, Rhode Island, specializes in manufacturing highly engineered and complex perforated metal parts that have application in diverse end markets including industrial machinery, automotive, aerospace, sugar products and consumer electronics manufacturers. Ferguson’s net sales in 2018 were $39.4 million.

We funded our acquisition of Ferguson with borrowings on our revolving credit facility and cash on hand.

2016 Acquisitions

On August 1, 2016, through our wholly owned subsidiary American Metals Corporation, we acquired Alaska Steel Company (“Alaska Steel”), a full-line metal distributor headquartered in Anchorage, Alaska. Our acquisition of Alaska Steel was our first entry into the Alaska market. Alaska Steel provides steel, aluminum, stainless and specialty metals and related processing services to a variety of customers in diverse industries including infrastructure and energy throughout Alaska. Alaska Steel’s net sales in 2018 were $26.7 million.

On April 1, 2016, we acquired Best Manufacturing, Inc. (“Best Manufacturing”), a custom sheet metal fabricator of steel and aluminum products on both a direct and toll basis. Best Manufacturing, headquartered in Jonesboro, Arkansas, provides various precision fabrication services including laser cutting, shearing, computer numerated control (“CNC”) punching, CNC forming and rolling, as well as welding, assembly, painting, inventory management and engineering expertise. Best Manufacturing’s net sales in 2018 were $26.3 million.

On January 1, 2016, we acquired Tubular Steel, Inc. (“Tubular Steel”), a distributor and processor of carbon, alloy and stainless steel pipe, tubing and bar products. Tubular Steel, headquartered in St. Louis, Missouri, has six locations and a fabrication business that supports its diverse customer base. Tubular Steel’s net sales in 2018 were $174.4 million.

We funded our 2016 acquisitions with borrowings on our revolving credit facility and cash on hand.

The allocation of the total purchase price of our 2016 acquisitions to the fair values of the assets acquired and liabilities assumed was as follows:


	(in millions)
Cash	$	1.5
Accounts receivable		14.1
Inventories		66.6
Property, plant and equipment		62.2
Goodwill		104.7
Intangible assets subject to amortization		77.1
Intangible assets not subject to amortization		38.2
Other current and long-term assets		0.5
Total assets acquired		364.9
Current and long-term debt		6.1
Other current and long-term liabilities		7.3
Total liabilities assumed		13.4
Net assets acquired	$	351.5

Summary purchase price allocation information for all acquisitions

All of the acquisitions discussed in this note other than Acero Prime have been accounted for under the acquisition method of accounting and, accordingly, each purchase price has been allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of each acquisition. The accompanying consolidated statements of income include the revenues and expenses of each acquisition since its respective acquisition date. The consolidated balance sheets reflect the allocations of each acquisition’s purchase price as of December 31, 2018 or 2017, as applicable. The purchase price allocations for the 2018 acquisitions of All Metals, KMS and DuBose are preliminary and are pending the completion of pre-acquisition income tax returns. The measurement periods for purchase price allocations do not exceed 12 months from the acquisition date.

The increase in our ownership of Acero Prime from 60% to 100% was accounted for as an equity transaction. The difference between the $29.0 million consideration paid and the $19.7 million noncontrolling interest, or $9.3 million, was recognized as a decrease in total Reliance stockholders’ equity.

As part of the purchase price allocations of the acquisitions completed in 2018, 2017 and 2016, $18.3 million, $3.7 million and $38.2 million, respectively, were allocated to the trade names acquired. We determined that all of the trade names acquired in connection with these acquisitions had indefinite lives since their economic lives are expected to approximate the life of each company acquired. Additionally, we recorded other identifiable intangible assets related to customer relationships for the 2018, 2017 and 2016 acquisitions of $24.8 million, $3.7 million and $76.8 million, respectively, with weighted average lives of 10.0, 10.0 and 15.5 years, respectively. The goodwill arising from our 2018, 2017 and 2016 acquisitions consists largely of expected strategic benefits, including enhanced financial and operational scale, as well as expansion of acquired product and processing know-how across our enterprise. Tax deductible goodwill from our 2018 and 2016 acquisitions amounted to $21.3 million and $104.7 million, respectively. Total tax deductible goodwill amounted to $685.4 million as of December 31, 2018.